1984 (4) TMI 45 - HC - Income Tax

Summary

Issues Involved: The judgment involves questions regarding the deduction eligibility of commission payments, staff salaries during foreign tours, and cost of D. D. Stamps under section 35B of the Income Tax Act for the assessment year 1972-73.

Commission Payments Eligibility: The Tribunal was questioned on the legality of considering commission payments for deduction under section 35B. The Tribunal justified the allowance of these payments as they were related to export sales facilitation, publicizing goods, and bringing buyers and sellers together, falling within the purview of section 35B.

Staff Salaries Deduction: Another issue raised was whether the portion of staff salaries paid during foreign tours could qualify for deduction under section 35B. The Tribunal's previous decision emphasized that expenses incurred for activities like publicity campaigns or obtaining customers outside India, even if paid in India, could be eligible for deduction under section 35B.

Cost of D. D. Stamps Deduction: The question of whether the cost of D. D. Stamps amounting to Rs. 6,047 could qualify for deduction under section 35B was also raised. The Tribunal's decision highlighted that expenses incurred for specific activities mentioned in section 35B, whether in India or outside, could be considered for deduction.

Legal Interpretation: The Department referred to a Madras High Court decision to argue that expenses under section 35B must be incurred outside India. However, the Court clarified that while most expenses under section 35B are expected to be outside India, certain activities like publicity campaigns or market research could be managed by Indian parties and still qualify for deduction.

Conclusion: The Court rejected the applications for reference, stating that the questions raised were factual in nature and had been addressed in previous years. It was emphasized that expenses falling within the specific activities outlined in section 35B could be considered for deduction, regardless of whether they were incurred in India or outside.