TaxTMI 
TaxTMI 
2002 (7) TMI 21
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of ready made garments for the relevant assessment year 1976-77. During the course of assessment, the Assessing Officer has noticed that the assessee has claimed weighted deduction under section 35B of the Income-tax Act, 1961, in respect of several items which includes salary paid to the technical director in the tune of Rs. 67,948. The Assessing Officer has rejected the claim of the assessee holding that it does not come under any of the sub-clauses of sub-section (1)(b) of section 35B of the Income-tax Act, 1961. In appeal before the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax (Appeals) has confirmed the view taken by the Assessing Officer. In appeal before the Tribunal, the Tribunal has considered the sub-cla....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed reliance on the decision of the apex court in the case of CIT v. Stepwell Industries Ltd. [1997] 228 ITR 171 and in the case of V. D. Swami and Co. (P) Ltd. v. CIT [1984] 146 ITR 425 (Mad) and British Airways v. CIT [1992] 193 ITR 439 (Cal). Sub-clause (viii) of sub-section (1)(b) of section 35B provides that the performance of services outside India in connection with, or incidental to, the execution of any contract for the supply outside India of such goods, services or facilities eligible for deduction under section 35B of the Income-tax Act, 1961. Before we go into the facts of this case, we would like to refer to the observations of their Lordships in the aforesaid case, i.e., CIT v. Hero Cycles (P) Ltd. [1997] 228 ITR 463 (SC),....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he teeth of this specific exclusionary provision. A look at the other sub-clauses of section 35B(1)(b), such for instance as sub-clauses (i), (iv), (vi), (vii), (viii) and (ix), also shows the insistence of Parliament that the weighted deduction cannot be exigible unless the expenditure under the different heads are incurred 'outside India', a phrase which occurs again and again in the various sub-clauses. To accept learned counsel's argument that the Indian situs of the export expenditure is no disqualification for eligibility for weighted deduction would be to bring in under one broad indiscriminate sweep, all expenses in an exporter's business. If that were the position, Parliament need not have troubled to enact so many clauses in secti....