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Issues Involved:
1. Weighted deduction u/s 35B on specific items. 2. Deduction of tax under the Companies (Profits) Surtax Act, 1964. Summary: Issue 1: Weighted Deduction u/s 35B *Packing Credit Interest (Rs. 20,73,537):* The Tribunal disallowed the claim for weighted deduction, concluding that the interest on packing credit loans was not for services performed outside India. The assessee's argument that loans for working capital before shipment were directly related to export promotion was rejected, as there was no evidence that the loans were used for services outside India. *Post-due/Overdue Interest on Export (Rs. 8,24,280):* The Tribunal upheld the disallowance, stating that the bank's interest charges due to delayed payment by foreign buyers did not qualify as expenditure for services performed outside India. The bank's discounting of bills was not considered a service executed outside India. *Bank Charges Including Cost of Remittance (Rs. 4,06,141):* The Tribunal found that bank charges for discounting export bills were not for services performed outside India. The charges were incurred in India for early realization of export sales proceeds and did not qualify for weighted deduction. *Exchange Losses in Export (Rs. 19,965):* The Tribunal disallowed the claim, stating that exchange losses due to currency fluctuations were not equivalent to expenditure on services performed outside India. *Freight and Insurance (Rs. 1,05,76,274):* The Tribunal held that freight and insurance costs incurred in India before shipment did not qualify for weighted deduction, as they were not related to services performed outside India. *Packing and Handling (Rs. 92,87,092):* The Tribunal disallowed the claim, noting that packing and handling charges incurred in India were routine expenses and not for services performed outside India. The assessee failed to provide evidence that these expenses were exclusively for export purposes. Issue 2: Deduction of Tax under the Companies (Profits) Surtax Act, 1964 The Tribunal disallowed the claim for deduction under the Companies (Profits) Surtax Act, 1964, in computing the assessee's total income. This decision was supported by a prior judgment of the High Court in the case of Molins of India Ltd. v. CIT [1983] 144 ITR 317 (Cal), which concluded that such deductions were not permissible. Conclusion: Both questions were answered in the affirmative and in favor of the Revenue. The Tribunal's decisions on disallowing the claims for weighted deduction and tax deduction under the Companies (Profits) Surtax Act were upheld. A certificate for appeal to the Supreme Court was granted for question No. 2, following the precedent set in Molins of India Ltd. v. CIT.
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