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TMI Blog2008 (7) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... ment years which are relevant for the purposes of these references are 1978-79, 1979-80, and 1980-81. The question that has been referred for the opinion of this Court in respect of these three assessment years is :- "Whether on the facts and in the circumstances of the case the Tribunal is correct in law in holding that the assessee company, who is procuring export orders from the foreign buyers and passing on to the manufacturers or dealers is not entitled to weighted deductions under Section 35 B of the Income Tax Act?" 2. The facts as indicated in the statement of case are that the assessee which is a Private Limited Company followed the accounting year ending on 30 th September. The assessee, admittedly, procured export orders from foreign buyers and passed them on to the manufacturers or dealers of various goods in India, who made the exports. The assessee earned commission on such exports from the said Indian manufacturers / dealers. It is indicated that the assessee did not directly export any goods and merely earned income from commission. The assessee's claim was that it carried on all the activities of developing export markets and, therefore, it was entitled to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed by us above, it is to be noted that Finance (No.2) Act, 1980, restricted the expenditure to four sub-clauses and omitted the other five sub-clauses (i), (iv), (vii), and (ix) too refer to the assessee's dealing in goods, services or facilities. The view of the Madras High Court would continue to apply to this amended section 35B for the assessment year 1980-81 as well. Consequently we uphold the rejection of assessee's claim for weighted deduction for the assessment year 1980-81. 4. Section 35B of the said Act as it stood in respect of the assessment year 1979-80 contained sub-section (1A). This provision was omitted by the Finance Act of 1979 with effect from 01.04.1980, as such sub Section (1A) would not be applicable in respect of the assessment year 1980-81. The Tribunal while considering the three assessment years, was of the view that in so far as the assessment years 1978-79 and 1979-80 were concerned, the assessee was not entitled to the deductions under Section 35B in view of the provisions of sub-clause (1A) in as much as, the assessee was not engaged in the business of export of goods etc. However, in respect of the assessment year 1980-81, the Tribunal was o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such goods, services or facilities, and activities incidental thereto; (vi) furnishing to a person outside India samples or technical information for the promotion of the sale of such goods, services or facilities; (vii) travelling outside India for the promotion of the sale outside India of such goods, services or facilities, including travelling outwards from, and return to, India; (viii) performance of services outside India in connection with, or incidental to, the execution of any contract for the supply outside India of such goods, services or facilities; (ix) such other activities for the promotion of the sale outside India of such goods, services or facilities as may be prescribed. Explanation 1.In this Section, "domestic company" shall have the meaning assigned to it in caluse (2) of Section 80B. Explanation 2.For the purpose of sub-clause (iii) and sub clause (viii) of clause (b), expenditure incurred by an assessee engaged in the business of : (i) operation of any ship or other vessel, aircraft or vehicle, or (ii) carriage of, or making arrangements for carriage of, passengers, livestock, mail or goods, on or in relation to such operation or carria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany or a person other than a company who is a resident in India having incurred, directly or in association with any other person, any expenditure referred to in clause (b), subject to the other provisions of this Section, would be allowed a deduction of a sum equal to one and one-third times, the amount of such expenditure incurred during the previous year. 7. The types of expenditure have been indicated under Section 35 B (1) (b). Sub-clause (i) of clause (b) indicates that the expenditure must have been incurred wholly or exclusively on development or publicity outside India "in respect of goods, services or facilities which the assessee deals in or provides in the course of his business", where such expenditure is incurred before the 1 st day of April, 1978. It is an admitted position that sub-clause (i) of clause (b), does not directly apply in the present case as the assessee is claiming deductions in respect of the expenditure which is relatable to sub-clauses (ii) and (vii). However, reference to sub clause (i) is necessary because, both the sub clauses (ii) and (vii) carry the expression "such goods, services or facilities". It is obvious that the expression "such go ..... X X X X Extracts X X X X X X X X Extracts X X X X
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