1988 (12) TMI 88 - HC - Income Tax

Export Market Development Allowance, New Industrial Undertaking, Special Deduction, Weighted Deduction

Summary

Issues:
1. Whether weighted deduction under section 35B of the Income-tax Act, 1961, on commission paid to Shri Pritam Singh Bedi is allowable.
2. Whether relief under section 80J of the Income-tax Act, 1961, in respect of the lamination unit set up by the assessee is permissible.

Analysis:
Issue 1:
The assessee, a company manufacturing automobile spare parts, claimed weighted deduction under section 35B for commission paid to Shri Pritam Singh Bedi for facilitating exports. The Income-tax Officer disallowed the claim citing that the payment was made in India. However, the Appellate Assistant Commissioner allowed the claim, emphasizing that the services were performed by Shri Bedi outside India. The Tribunal upheld this decision, stating that the payment location was not a requirement for section 35B relief. The court agreed, highlighting that the agreement clearly outlined services falling under eligible sub-clauses. The court dismissed the Revenue's argument based on Kerala High Court decisions, emphasizing that the location of service, not payment, is crucial for claiming relief under section 35B. The court ruled in favor of the assessee on this issue.

Issue 2:
The assessee also sought relief under section 80J for its new lamination unit, which was denied by the Income-tax Officer citing a Calcutta High Court decision. However, the Appellate Assistant Commissioner allowed the claim, and the Tribunal supported this decision. The court noted that the Calcutta High Court decision was subsequently reversed by the Supreme Court, rendering it irrelevant. The court held that the new lamination unit met all conditions for relief under section 80J and ruled in favor of the assessee on this issue as well. No costs were awarded in this matter.