1979 (12) TMI 80 - AT - Income Tax

Summary

Issues Involved:
1. Allowability of weighted deduction under Section 35B of the Income Tax Act, 1961, for various expenses related to export activities for the assessment years 1974-75, 1975-76, and 1976-77.

Detailed Analysis:

Issue 1: Packing Expenses
Assessment Years Involved: 1974-75, 1975-76, 1976-77
Amounts Claimed: Rs. 45,992, Rs. 77,415, and Rs. 44,004 respectively.
Judgment: The assessee contended that the packing expenses were in the nature of advertisement and publicity incurred outside India. The Tribunal agreed with the assessee, stating that the cartons used for export products qualified as advertisement devices. Therefore, these expenses were eligible for weighted deduction under sub-clause (i) of clause (b) of sub-section (1) of Section 35B of the Act. The orders of the lower authorities were reversed, and the ITO was directed to work out the relief on these expenses for all three assessment years.

Issue 2: Carriage and Insurance of Goods
Assessment Years Involved: 1974-75, 1975-76, 1976-77
Amounts Claimed: Rs. 69,662, Rs. 1,17,959, and Rs. 10,301 respectively.
Judgment: The Tribunal followed the decision of the Special Bench of the ITAT Bombay Bench 'D' in the case of M/s. J.H. & Co., Bombay, which held that expenses related to carriage and insurance of goods did not qualify for weighted deduction under Section 35B. Consequently, the Tribunal reversed the AAC's orders allowing these deductions, and the cross objections by the Revenue were allowed.

Issue 3: Port Fees, Freight, and Shipping Charges
Assessment Years Involved: 1974-75, 1975-76, 1976-77
Amounts Claimed: Rs. 58,375 for 1976-77.
Judgment: Similar to the carriage and insurance of goods, these expenses were also disallowed based on the Special Bench decision, as they did not qualify for weighted deduction under Section 35B. The cross objections by the Revenue on these counts were allowed, and the AAC's orders were reversed.

Issue 4: Salary to Typist-cum-Clerk
Assessment Year Involved: 1976-77
Amount Claimed: Rs. 4,349
Judgment: The Tribunal agreed with the assessee that the salary paid to the typist-cum-clerk, who was engaged exclusively in export activities, qualified for weighted deduction under Section 35B. The Tribunal directed that the entire amount of Rs. 4,349 should be allowed for weighted deduction, reversing the AAC's partial disallowance.

Conclusion:
The appeals by the assessee for the assessment years 1974-75, 1975-76, and 1976-77 were allowed in respect of packing expenses, which were deemed as advertisement and publicity expenses eligible for weighted deduction under Section 35B. The cross objections by the Revenue regarding carriage, insurance, port fees, freight, and shipping charges were allowed, reversing the AAC's orders. The Tribunal also allowed the full claim for the salary paid to the typist-cum-clerk for the assessment year 1976-77.