1989 (6) TMI 2 - HC - Income Tax

Summary

Issues:
1. Entitlement to weighted deduction under section 35B for freight and insurance expenses for the assessment year 1975-76.
2. Entitlement to weighted deduction for head office expenses for the same assessment year.
3. Deduction of surtax liability in computing income for the relevant accounting period.

Analysis:

Issue 1: Entitlement to weighted deduction for freight and insurance expenses:
The court referred to a previous decision in Bharat General and Textile Industries Ltd. v. CIT and ruled in favor of the Revenue, affirming the entitlement to weighted deduction under section 35B for the mentioned expenses.

Issue 2: Entitlement to weighted deduction for head office expenses:
The assessee claimed weighted deduction for head office expenses related to exports, but the Income-tax Officer initially disallowed it. The Commissioner of Income-tax (Appeals) upheld part of the claim based on a formula from a Special Bench of the Tribunal in Bombay. The Tribunal also supported this decision, citing the reasonableness of the formula and the Department's circular accepting it. The court, finding no reason to interfere, ruled against the assessee, affirming the Tribunal's decision.

Issue 3: Deduction of surtax liability:
The court referred to a previous decision in Molins of India Ltd. v. CIT and ruled in favor of the Revenue, denying the deduction of surtax liability in computing income for the relevant accounting period.

The judgment concluded with a unanimous decision by the judges, agreeing on the outcomes for each issue. The court did not award costs to either party.