1983 (11) TMI 9

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....the circumstances of the case, the Tribunal is right in law in disallowing the claim under section 35B of the Income-tax Act in respect of packing, freight and insurance, cooly, trade expenses and legal expenses and all or any of the above items of expenditure ? " The assessee is a firm carrying on business in the export of handloom fabrics. It claimed weighted deduction under section 35B of the Incometax Act, 1961, in respect of the following expenditure: Rs. Salary 1,35,857 Rent 16,800 Packing 2,67,279 Freight and insurance 9,70,486 Cooly 39,422 Insurance and E.C. & G.C. 81,374 Trade expenses 78,927 Legal expenses 15,000 -------------------- 16,05,146 -------------------- The Income-tax Officer de....

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....for the development of export trade, all the items of expenditure should be taken to have been incurred by the assessee exclusively in connection with the export and, therefore, all the items of expenditure should have been allowed towards weighted deduction under section 35B of the Act. Alternatively, the learned counsel contends that even assuming that there were some sales in India, having regard to the fact that the local sale of handloom fabrics is only to the extent of one lakh of rupees as against the export value of one crore of rupees and more, all the expenditure should be deemed to have been incurred substantially for effecting export sales. He further submits that even if a proportion is to be Worked out, at 99.4 per cent. repre....

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....es. This shows that if the expenditure has been incurred partly for export and partly for other activities in India, then the entire expenditure cannot have the benefit of weighted deduction under section 35B(1)(a), and it is only the expenditure which is referable to the actual export that will be entitled to the weighted deduction. The same provision excludes expenditure incurred in India in connection with the distribution, supply or provision outside India of such goods or any expenditure incurred on the carriage of such goods to their destination outside India or on the insurance of such goods while in transit. Thus, the expenditure like freight, insurance, packing, cooly, etc., incurred in India in connection with the export cannot be....