1991 (12) TMI 33

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.... Income-tax Act, 1961 ("the Act" for short), with which we are concerned in the present reference. It is submitted that the normal practice which was adopted in the export of H. P. S. was that the foreign buyer had to pay cash against documents. In other words, the foreign buyer was required to pay the price of the goods to the bank at the time of retiring the documents. The foreign buyer, however, informed the assessee that, on account of credit squeeze and dear money position which was prevailing, it was not in a position to make payment on presentation of the documents and bill. The foreign buyer informed the assessee that it was possible to make payment of the price of the goods supplied only on arrival of the steamer and that the busin....

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.... for short). The Tribunal, following the decision of its Special Bench in the case of J. Hemchand and Co., confirmed the view taken by the Commissioner. It is in the background of the above facts that the Tribunal has referred to us, for our opinion, the following question, under section 256(1) of the Act, at the instance of the assessee : " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee was not entitled to claim weighted deduction on interest of Rs. 2,26,093 and whether the Tribunal has further erred in not drawing the requisite distinction between the aforesaid amount of interest and the other interest of Rs. 2,84,220 on which weighted deduction was not claimed....

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....arrival of the steamer, it had to pay Rs. 2,26,093 to the bank. The question is whether the said payment or expenditure would fall under sub-clause (viii) of section 35B(1)(b). The expenditure which would qualify for weighted deduction under section 35B(1) is the expenditure which is referred to in clause (b) of the said provision. Under sub-clause (viii) of clause (b), expenditure incurred wholly and exclusively on 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 would qualify for weighted deduction. Would the expenditure incurred by the assessee in making payment to the bank as aforesaid amount to expenditure incurre....