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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 ..... 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 30th 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 the export market development allowance under Section 35B of the said Act. The Assessing Officer, as well as, the Commissioner of Income Tax (Appeals) rejected the assessee's claim for the weighted deductions under Section 35B of the said act. 3. When the assessee preferred the said appeals before the Income Tax Appellate Tribunal, the same were dismissed by the Tribunal b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-81 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 of the view that, even de hors the question of sub section (1A) of Section 35 B, the assessee would not be entitled to the deductions in as much as, the assessee itself did not carry out any export, which, according to the Appellate Tribunal was a necessary requirement for availing of the deductions. 5. Section 35B as it stood prior to deletion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lling 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 carriage or arrangements for carriage (including in each case expenditure incurred on the provision of any benefit, amenity or facility to the crew, passengers or livestock) shall not be regarded as expenditure incurred by the assessee on the supply outside India of services or facilities. (1A) Notwithstanding anything contained in sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imes, 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 1st 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 goods, services or facilities" Has reference to the goods, services or facilities which have been specified in sub-clause (i), that is, goods, services or facilities in which the assessee deals in or provides in course of his business. The admitted position in the present case is that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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