TaxTMI 
TaxTMI 
1980 (8) TMI 113
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.... the subscription paid to the National & Grindlays Bank Employees Union. 3. The assessee claimed the above expenditure by way of subscription paid to the Employees'Unionof the said Bank. The assessee firm had dealings with the above Bank. The ITO disallowed the assessee's claim on the ground that the said expenditure had not been incurred in connection with the business. This finding was upheld by the AAC. 4. Before us, the ld. counsel of the assessee submitted that since the assessee firm is having banking transactions with the said Bank, the said subscription paid to the Employees Union was in the interest of commercial expediency and to maintain good relations with the employees of the said Bank. In our opinion, there is force in t....
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.... 2,716.29 (b) Salary 12,943.00 (c) Staff Welfare 1,705.33 (d) Rent 1,950.00 (e) Electricity 300.00 (f) Stationery 863.90 . . 20,479.27 Sales of Rs. 18,00,380.37 and Rs. 1,39,839.50 in respect of export and others respectively. So the ratio is 90 : 7 . 19,001.27 . Rs. 81,911.22 Although the ITO accepted the basis on which the assessee allocated the expenditure for export purposes, he held that out of the total expenses of Rs. 81,911 only item No. (iii) (Legal expenses (was covered by the provisions of s. 35B, and, accordingly, he allowed the weighted deduction of Rs. 1,520 i.e. 1/3rd of Rs. 4,561. 6. Against the findings of the ITO, the assessee went in appeal ....
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....erely like a case of reduction in sales price which was automatically reflected by the reduction of gross profit rate in the trading account. Further, according to the AAC, the loss due to currency fluctuations was not covered by any of the sub-cl. (i) to (viii) of s. 35(i)(b) of the IT Act. He, therefore, upheld the disallowance made by the ITO. Against the decision of the AAC, on this point, the assessee, as well as the Department, has come up in the present appeals. 8. According to the ld. counsel of the assessee, a sum of Rs. 4,561 paid on account to legal expenses has been fully allowed by the ITO as being eligible for weighted deduction under s. 35B, and, hence, the AAC should not have restricted the claim by taking only 4/5th of t....
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....gible for weighted deduction under s. 35B. In our opinion, the allocation, made by the AAC is not correct, considering the extent of export sales and the local sales. After deducting the legal expenses of Rs. 4,561, the remaining expenses (excluding coin conversion losses) are reducted to Rs. 27,320. Considering the ratio of export sales to the local sales, we direct that 9/10th of the above expenses should be allowed under s. 35B of the IT Act. In other words, an expenditure of Rs. 24,588 would be entitled for weighted deduction under s. 35B of the IT Act, 1961. 10. As regards the claim of Coin Conversion Loss of Rs. 50,000, the ld. counsel of the assessee submitted that the said loss could not be deducted out of the sale proceeds as he....