1984 (11) TMI 92

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....ppeal before us. 2. As regards item No. (iii) above, for the reasons stated in our orders in IT Appeal Nos. 208 and 209 (Bang.) of 1982 dated 28-5-1984, we agree with the Commissioner (Appeals) and dismiss the ground raised by the assessee. Bank charges do not also qualify for weighted deduction in the light of the decision of the Special Bench of the Tribunal in J.H. & Co. v. Second ITO 1 SOT 150 (Bom.). 3. This leaves us with the claim for weighted deduction on interest paid to banks on packing loan and export bills. The interest is paid on loans advanced by banks in connection with export of goods. The loans are advanced at subsidised rate of interest. The method of obtaining packing credits appears to be as follows: "The assess....

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....irections under sections 144A and 144B of the Act for the assessment year 1978-79. The Commissioner (Appeals) agreed with him and the assessee is in appeal. 4. The learned counsel for the assessee submitted that an Indian exporter could not compete with the foreign exporter under normal conditions because of the high cost of production of goods here. In order to promote exports, banks were permitted to advance loans at favourable rates of interest to exporters. Since export could not have taken place but for these soft loans, it was argued that interest paid on these loans was an expenditure wholly incurred for the purposes of export and was entitled to weighted deduction under section 35B(1)(b)(viii) being expenditure incurred in the pe....