TaxTMI 
TaxTMI 
1999 (4) TMI 24
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....B(1)(b)(viii) of the Income-tax Act, 1961, in respect of an expenditure incurred in India on insurance, shipment, freight, despatch and clearing and transportation of the goods to their destination ?" The said question of law arises out of the order dated January 2, 1981, passed by the Income-tax Appellate Tribunal in Income-tax Appeal No. 2179 (Alld.) of 1979 relating to the assessment year 1978-79. The facts of the case in brief are that the respondent-assessee is a registered firm and is engaged in the business of tanning of raw hides and sale thereof. It also exports tanned leather. During the assessment year 1978-79, the respondent-assessee claimed weighted deduction under section 35B of the Act, in respect of the following am....
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....The respondent-assessee filed an appeal against the aforesaid order before the Income-tax Appellate Tribunal. It was pointed out before the Tribunal that the assessee's export contracts were either C.I.F. contracts or C and F contracts. C.I.F. contracts meant cost inclusive of insurance and freight, whereas C and F contract meant cost and freight. According to the respondent-assessee in respect of such contracts under which exports had taken place the amounts claimed by the assessee for weighted deduction were permissible under section 35B, viz., under its sub-section (1)(b)(viii) of the Act. On behalf of the Department, it was pointed out before the Tribunal that the nature of the contracts were not looked into by the lower authorities and....
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.... distribution, supply or provision outside India of such goods, services or facilities, not being expenditure incurred in India in connection therewith or expenditure (wherever incurred) on the carriage of such goods to their destination outside India or on the insurance of such goods while in transit ; . . . (viii) 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 ; . . ." The Income-tax Appellate Tribunal had allowed the claim of weighted deductions on the aforementioned items of expenditure under sub-clause (viii) of sub-section (1)(b) of section 35B of the Act. From a perusal of clause (viii) reproduced abo....
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....f subsection (1)(b) of section 35B of the Act, wherein expenditure on freight, insurance, etc., incurred on the carriage of such goods to their destination outside India is excluded for being considered for weighted deduction under section 35B(1) of the Act, the respondent-assessee was not entitled to weighted deduction on the items of expenditure in question. The Tribunal was not justified in allowing the weighted deductions claimed by the respondent-assessee under sub-clause (viii) of sub-section (1)(b) of section 35B of the Act. Shri A. N. Mahajan learned counsel for the Department, placed reliance upon the decision of the Calcutta High Court in the case of Brooke Bond India Ltd. v. CIT [1992] 193 ITR 390, in support of his submission....
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....upreme Court had held as under : "In order to get this deduction, the assessee will have to prove that the expenditure was incurred during the previous year wholly and exclusively for the purposes set out in clause (b) of section 35B(1). There cannot be any blanket allowance of the expenditure nor can there be any blanket disallowance. Every case has to be discussed specifically and the expenditure must be found to be of the nature mentioned in any one of the sub-clauses. If the expenditure does not fall in any of these categories, it can not be allowed as a deduction. Some of the sub-clauses provide that if the expenditure is incurred in India, it cannot be allowed but in some of the sub-clauses this requirement is not there. In such ca....
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....nt-assessee, are not eligible for weighted deduction. We have also considered the various sub-clauses of sub-section (1)(b) of section 35B of the Act, i.e., sub-clauses (i) to (ix) but we find that the items of expenditure are not at all covered in any of the sub-clauses of sub-section (1)(b) of section 35B of the Act. On the other hand, the items of expenditure in question have been specifically excluded under sub-clause (iii) of sub-section (1)(b) of section 35B of the Act. The Supreme Court, in the case of CIT v. Stepwell, Industries Ltd. [1997] 228 ITR 171 had held as follows : "The expenditure which qualifies for deduction under section 35B(1)(b)(iii) will have to be expenditure incurred outside India in connection with distribution....