TaxTMI 
TaxTMI 
1984 (5) TMI 55
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.... goods. The duty paid is at the stage of contract of the assessee-company and Coffee Board in India. It is in no way connected with any agreement or contract with the foreign buyer. The export duty paid by the assessee-company represents its selling price in India. As such, this item of expenditure cannot be treated as one entitled to the weighted deduction under any of the sub-clauses. " Before the Commissioner (Appeals) it was urged on behalf of the assessee that the said expenditure had been incurred at the point of shipment of coffee and not at the time of signing the contract with the Coffee Board, and as such it was an expenditure incurred in connection with or incidental to supply of goods outside India. Reliance was also sought to be placed on some decisions of the Tribunal at Bombay. The Commissioner (Appeals) held as follows : " 3. After a careful consideration of all the facts of the case I am of the opinion that weighted deduction has to be allowed on the export duty paid. In coming to the conclusion that the appellant is not entitled to weighted deduction, the Income-tax Officer has obviously proceeded on wrong premises. It is not correct to say that the duty ....
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....s of facts on record. We, therefore, hold that the Commissioner (Appeals) was justified in entertaining this ground. 4. The standing counsel for the revenue pointed out that the claim before the ITO was under section 35B(1)(b)(viii). Before the Commissioner (Appeals) the claim was both under sub-clauses (iii) and (viii). He submitted that the expenditure on export duty could not be equated with that incurred in 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. It could not also be allowed under sub-clause (iii) since it was an expenditure incurred in India. He submitted that the decision of the Karnataka High Court in Ullal Narayana Mallya & Sons's case with regard to freight and insurance charges would apply with equal force in the case of export duty also. In Ullal Narayana Mallya & Sons' case having regard to the amendment of section 35B(1)(b)(iii) in 1970, the claim under sub-clause (iii) was given up. The assessee sought to rely on sub-clause (viii). The Court held that sub-clause (viii) would apply only to an after-sale service in outside countries havi....
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.... above logic were correct, even cost of goods and expenditure incurred on freight would qualify for weighted deduction. Unless an assessee produces goods, he cannot export them. Unless he carries them to the port, the goods cannot be exported. That way, every expenditure incurred by the assessee would have to be given relief under section 35B(1) and the prohibitions contained in section 35B(1)(b)(iii) and (viii) against allowance of weighted deduction on expenditure incurred in India would be rendered otiose. There is no dispute that export duty is an expenditure incurred in India. The first portion of section 35B(1)(b)(iii) reads as follows : " 35B(1)(b) The expenditure referred to in clause (a) is that incurred wholly and exclusively on-- (iii) distribution, supply or provision outside India of such goods, services or facilities, not being expenditure incurred in India in connection there with... " [Emphasis supplied] Therefore, the expenditure incurred in India in connection with the supply of goods outside India is clearly not entitled to weighted deduction under section 35B(1)(b)(iii). 7. We now examine the assessee's claim under section 35B(1)(b)(viii). The clause....
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....ning information regarding markets outside India for such goods, services or facilities ; (iii) 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' ; (iv) maintenance outside India of a branch, office or agency for the promotion of the sale outside India of such goods, services or facilities ; (v) preparation and submission of tenders for the supply or provision outside India of such goods, services or facilities, and activities incidental thereto ; (vi) furnishing to a person outside India samples or technical information for the promotion of the sale of such goods, services or facilities ; (vii) travelling outside India for the promotion of the sale outside India of such goods, services or facilities, including travelling outward from, and return to, India ; (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, se....