1989 (1) TMI 15 - HC - Income Tax

Summary

Issues:
1. Interpretation of weighted deduction under section 35B of the Income-tax Act, 1961.
2. Allocation of expenses on printing, stationery, posts, telegraphs, electricity charges, rent, and staff salaries for weighted deduction under section 35B.

Analysis:
The judgment pertains to an application under section 256(2) of the Income-tax Act, 1961, seeking the Income-tax Appellate Tribunal to refer questions of law to the High Court. The first question raised was whether weighted deduction under section 35B is allowable on a specific payment made to the Export Credit and Guarantee Corporation. The Appellate Assistant Commissioner and the Tribunal found the expenditure necessary for fixing credit limits of buyers, qualifying for weighted deduction under sub-clause (ii) of section 35B(1)(b). The Tribunal upheld this contention, rejecting the Commissioner's argument based on sub-clause (iii) of section 35B(1)(b) regarding insurance and freight, as it was related to insuring creditworthiness rather than goods in transit. The High Court concluded that this issue was a finding of fact and did not warrant a reference.

Moving to the second question, concerning the allocation of expenses on printing, stationery, posts, telegraphs, electricity charges, rent, and staff salaries for weighted deduction under section 35B, the Tribunal's finding that these expenses qualified under various sub-clauses of section 35B(1)(b) was upheld. The High Court emphasized that the determination of the portion of expenditure related to export sales was a question of fact. Citing a previous case, it reiterated that such apportionment was factual, and as long as the expenses promoted export development as per the Act, they need not be incurred solely in India. The High Court concurred with the Tribunal's findings that no question of law arose from the allocation of expenses for weighted deduction.

In conclusion, the High Court rejected the application, stating that both issues raised were findings of fact rather than questions of law, and therefore, did not necessitate a reference to the Court. The judgment made no order regarding costs in this matter.