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Issues:
- Disallowance of claim for weighted deduction under section 35B of the Income-tax Act, 1961 for commission paid to local agents of foreign buyers in India. Analysis: The Appellate Tribunal referred the question of law regarding the disallowance of the claim for weighted deduction under section 35B of the Income-tax Act, 1961 for commission paid to local agents of foreign buyers in India. The Tribunal had disallowed the claim based on the premise that the commission was paid in India. The Commissioner of Income-tax (Appeals) upheld the disallowance, leading to further appeals by the assessee before the Appellate Tribunal. The Tribunal, relying on previous decisions, concluded that the assessee was not entitled to the deduction. The key contention by the assessee was that the Tribunal did not consider whether the claim could fall under any other sub-clause of section 35B(1)(b) of the Act. The onus to prove entitlement to weighted deduction lies with the assessee, as per judicial precedents. The Supreme Court emphasized that the expenditure must align with the sub-clauses of section 35B(1)(b) and be incurred exclusively for the specified purposes. The Court highlighted the need for a case-specific examination to determine eligibility for the deduction. The Tribunal's failure to assess the expenditure in light of the relevant sub-clauses was a crucial oversight. The Supreme Court's rulings in similar cases underscored the importance of establishing the expenditure's alignment with the specified criteria under section 35B. Given the legal principles laid down by the Supreme Court, the High Court directed the Appellate Tribunal to reevaluate the matter. The Tribunal was instructed to consider the nature of the expenditure and determine whether it qualified for weighted deduction under section 35B of the Act. The Court stressed the necessity for the Tribunal to analyze the expenditure vis-a-vis the sub-clauses of section 35B(1)(b) and the specific requirements therein. The Tribunal's decision to deny the claim solely based on the location of payment was deemed inadequate, necessitating a fresh assessment in accordance with the Supreme Court's guidance. Therefore, the High Court refrained from directly answering the question of law posed and instead mandated the Appellate Tribunal to rehear the case. The Tribunal was directed to reconsider the matter in light of the Supreme Court's decisions and determine the eligibility of the expenditure for weighted deduction under section 35B of the Income-tax Act, 1961. The Court emphasized the need for a thorough examination of the expenditure's alignment with the statutory provisions to make a well-founded decision on the claim for deduction.
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