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TMI Blog1986 (10) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... departmental representative. 3. Till the end of the accounting year relevant to the assessment year 1979-80, the appellant company had not commenced any business. In January 1979, however, the appellant company started its business of deep sea fishing, and export of fish. A charter agreement duly approved by the Government of India witnessing the terms and conditions was entered into between a Thai company, viz., Seawest Co. Ltd. of Bangkok on the one hand and the assessee on the other on 30-12-1978. The duration of the agreement was initially for a period of one year but it was renewable for a period of three years by mutual agreement of the parties and subject to the approval by the Government of India, As per stipulations agreed upon Seawest Co. Ltd. was to provide to and place at the disposal of the assessee 20 Deep Sea Fishing Trawlers. These fishing vessels were to proceed outside Indian territorial waters and carry on fishing operations within 200 miles of the Indian Exclusive Economic Zone. All the catch netted by the trawlers was to be brought to the operational port, i.e., Port Blair (Andman andNicobar Islands) from where the assessee-company supervised and managed its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent dated 30-12-1978. After perusing these clauses the Commissioner (Appeals) found that the expenditure in question was incurred only for the purposes of the deep sea fishing activity and for bringing the fish to Port Blair and thereafter for taking it for sale abroad. According to him, the expenditure thus incurred was clearly for the purpose of bringing into existence the commodity which was to be exported and which did not fall for allowance within the scope of section 35B. Thereafter, the Commissioner (Appeals) referred to the decision of the Special Bench of the Tribunal in the case of J.H. Co. v. Second ITO [1982] 1 SOT 150 (Bom.) and said that the view taken by him was in accordance with that decision. The Commissioner (Appeals) also relied on the decision of the Hon'ble Delhi High Court in the case of Handicrafts Handloom Export Corpn. of India v. CIT [1983] 140 ITR 532 and held that the onus of proving that the expenditure incurred fell within any one of the activities prescribed under section 35B having not been discharged by the assessee, its claim must inevitably fail. The Commissioner (Appeals) also referred to the decision of the Hon'ble Supreme Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee in the foreign markets and acting as its agent for promotion of sale of fish abroad. Shri Nanda refers to us the paper book consisting of 30 pages and in particular takes us through the terms of agreement with the Thai company dated 30-12-1978 and the letters of confirmation and other correspondence with the assessee Seawest Co. Ltd., Shri Nanda has also submitted that the decision of the Tribunal in the case of J. H. Co., in fact supports the case of the assessee and that the Commissioner (Appeals) was wrong in holding that this decision went against the assessee's claim. A copy of the expert opinion of Shri N.K.P. Salve, Chartered Accountant has also been furnished by the learned authorised counsel in support of the assessee's claim. 5. We have given our very careful consideration to the rival standpoints of view. The orders of the authorities below have been equally carefully perused and the paper book submitted on the side of the assessee has also been gone into. We have in particular gone through the agreement dated30-12-1978entered into between the Seawest Co. Ltd. and the assessee under which the sum in question of Rs. 49,50,016 was paid by the assessee-compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver and without prejudice to any claim that Seawest may otherwise have on Universal under this agreement. Seawest agrees that in case of loss or damage or non-availability or inaction or any or all of these vessels during the charter period, Seawest shall immediately replace the vessels with others of the same class and equipment. No charterage will be paid for periods when vessels are not in operation due to the fault of Seawest. 5. Owner to provide Seawest shall maintain each vessel in good operational condition for deep sea fishing and shall maintain necessary supplies of spares and equipment. Seawest shall provide the vessels with the required officers and crew skilled in the purpose for which said vessels are to be used in the charter fishing operations. Universal may complement the crew with its local personnel at the start of the fishing operations to the extent of 20 per cent of the total crew within the first year of this agreement, and increasing gradually during the renewal periods. Seawest shall pay for the running and maintenance of vessels and bear the salaries and wages of the crew (excluding the complementary local crew which shall be entitled to all suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permission to establish it had been given by the Government. In these circumstances, the provisions of section 35B(1)(b)(iv) did not apply. Furthermore, the agreement does not indicate that the expenditure of Rs. 49,50,016 was incurred by the assessee for performance of services outsideIndiain connection with or incidental to the execution of any contracts for supply of fish outsideIndia. In fact, no evidence has been furnished before us to show that any contracts were existing between the assessee and foreign buyers of fish in the relevant accounting period. In these facts and circumstances, the provisions of sub-clause (viii) of section 35B(1)(b) did not apply. There is also nothing to show that the payment of Rs. 49,50,016 has anything to do with the publicity or advertisement of the fish exported and, therefore, the provisions of sub-clause (i) of section 35B(1)(b) did not apply. In other words, the assessee has failed to establish that its claim of weighted deduction in respect of charter hire charges of Rs. 49,50,016 fell within any one of the clauses of section 35B(1)(b) as pleaded by the learned authorised counsel of the assessee. Even the 'confirmation' issued by the Thai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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