TaxTMI 
TaxTMI 
2005 (8) TMI 102
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....fied in holding that the commission payments made to the Handicrafts & Handloom Export Corporation of India (HHEC) are not entitled to weighted deduction under sub-clauses (i) and (iv) of section 35B(1)(b) of the Income-tax Act?" The brief facts of the case are as follows: The assessee was a manufacturer and exporter of hand-knotted carpets. The assessee had paid commission to the Handicrafts and Handlooms Export Corporation of India Ltd. (in short "the HHEC") and claimed weighted deduction under section 35B(1)(a) and (b) of the Act. HHEC is alleged to be a subsidiary of the State Trading Corporation of India Ltd. (in short "the STC") under the administrative control of the Ministry of Textiles (Government of India). The said HHEC is ....
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....steps for development of exports of handicrafts and handlooms besides gold jewellery from the country. Steps taken for developing exports of hand-knotted woollen carpets relate to. Product development 2. The HHEC has played a pioneering role in developing exports of Persian design hand-knotted carpets from India. Special attention is being paid to adaptation of new designs or introduction of new ones to suit the requirements of buyers from abroad. The corporation is a pace-setter in the field of product development. 3. For boosting exports of hand-knotted woollen carpets from India, the HHEC's carpets warehousing depot at Hamburg set up in 1965 has been doing a great deal of work for promoting the Indian carpets through regular par....
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....see must establish that it was maintaining an agency outside India. The mere payment to an agent to procure foreign orders, in our opinion, is not enough to bring the said payments within the purview of sub-clause (iv) of section 35B(1)(b)." Heard Sri Ashok Bhatnagar, advocate holding brief for Sri S. B. L. Srivastava, learned counsel for the assessee and Sri A. N. Mahajan, learned standing counsel appearing on behalf of the Revenue. "Section 35B.(1)(a) Where an assessee, being a domestic company or a person (other than a company) who is resident in India, has incurred after the 29th day of February, 1968, whether directly or in association with any other person, any expenditure (not being in the nature of capital expenditure or perso....
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....lysis of the provisions of section 35B(1)(b)(iv). The expenditure that is referred to therein has to be incurred on the maintenance outside India of a branch, office or agency for the promotion of sales outside India of the assessee's goods, services or facilities. Therefore, what is requisite is that the assessee should have maintained the branch, office or agency outside India. It is also requisite that such branch, office or agency should be for the promotion of sales outside India of the assessee's goods, services or facilities. When payment is made, as here, by an assessee of commission to agents outside India who had procured orders, the requirements of clause (iv) are far from satisfied. There is, in the first place, no maintenance b....