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TMI Blog2002 (9) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... years 1978-79 to 1981-82. The questions of law referred to this court are as follows: "Assessment year 1978-79: 1. Whether, on the facts and in the circumstances of the case, the bank guarantee commission of Rs. 51,883 is revenue expenditure liable to be allowed as deduction? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in allowing weighted deduction under section 35B of 75 per cent. of the expenditure on salary and bonus and 50 per cent. of the other? 3. Whether, on the facts and in the circumstances of the case, the assessee is entitled to weighted deduction on the interest paid on the shipping loan and in respect of a portion of the banking charges as expenditure incurred in India? 4. Whether, on the facts and in the circumstances of the case, the assessee is entitled to weighted deduction on the expenditure incurred on packing materials and printing and if weighted deduction is allowable whether the Tribunal was justified in allowing it on 50 per cent. of the expenses? 5. Whether, on the facts and in the circumstances of the case, the asses see is entitled to weighted deduction in respect of the items relating to prospect est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any portion of the godown rent? 5. Whether, on the facts and in the circumstances of the case, the assessee is entitled to weighted deduction under section 35B in respect of special chest and that too on 50 per cent. of the expenditure incurred? 6. Whether, on the facts and in the circumstances of the case, the assessee is entitled to claim deduction of the bonus payment in excess of the limits specified in section 36(1)(ii)?" "Assessment year 1981-82: 1. Whether, on the facts and in the circumstances of the case, the assessee is entitled to weighted deduction on the commission paid by it abroad? 2. Whether, on the facts and in the circumstances of the case, the assessee is entitled to claim deduction of the bonus payment in excess of the limits specified in section 36(1)(ii)?" At the time of argument, it was agreed that the questions of law can be classified into seven categories: (1) weighted deduction under section 35B of 75 per cent. of the expenditure on salary and bonus and 50 per cent. of other expenditure including godown rent and motor-car expenses; (2) weighted deduction under section 35B of 50 per cent. of the expenditure incurred on packing materials and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, and (d) charges paid to ECGC ; are also expenditure on (e) establishment, (f) bonus, (g) leave with wages, (h) salary to directors, (i) postage, telephone and telegram, and (j) printing and stationery". Learned counsel submitted that the Tribunal has not looked into the question whether it was wholly or exclusively incurred for the purposes of any of the sub-clauses mentioned in clause (b) of section 35B(1). On the other hand, learned counsel for the respondent submitted that the decision of the Supreme Court was on the fact that it is not established that the expenses in question were wholly or exclusively incurred for the purposes of any of the sub-clauses mentioned in clause (b) of section 35B(1). When we read the judgment of the Tribunal, we find that the Tribunal has not looked into the question whether the expenditure was wholly or exclusively incurred for the purposes of any of the sub-clauses mentioned in clause (b) of section 35B(1). In the above view of the facts, this matter has to be examined by the Tribunal to determine the proportionate deduction depending upon the number of persons working in the exports division. The next question is with regard to weig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le under the Bonus Act. The Income-tax Officer has also disallowed certain cash payments made during the year by way of bonus for the assessment year 1979-80. The Tribunal held that the payment of bonus in excess of the limit is a practice in the tea industry and it is allowable. Even though learned counsel for the Revenue asked for a remand, we do not think, it is necessary, since according to us, the bonus paid has to be deducted even though it is made in excess of the limit. The next is regarding the deduction under section 37 of the commission paid to Tara Agencies and Bhansali Brothers. So far as this aspect is concerned, the deduction was granted by the Tribunal. Learned counsel for the Revenue, at the time of argument contended that the assessee cannot claim any deduction in view of the provisions under section 40A(2)(a). The assessee contended that all the points raised before the Tribunal were considered by the Tribunal. But learned counsel for the Revenue contended that the Revenue is entitled to raise the above legal contention though raised for the first time before this court. All the necessary findings required to consider the question have been found by the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for serious consideration. This was done to arrive at a correct decision in law relating to the liability to additional surcharge. If really additional surcharge was chargeable according to the Finance Act even in case the said sum of Rs. 19 represented business income, the High Court cannot be called upon to act on the assumption that it is not so chargeable and answer the question stated. Such a course would neither be in the interest of law or of justice. That the Revenue was also a party to the erroneous assumption of law makes little difference to the principle." After hearing both sides, we are of the view that the matter should be examined by the Tribunal. Hence, we pass the following orders: For the assessment year 1978-79: Question No. 1 is answered in favour of the assessee and against the Revenue. Question No. 2 is remanded to the Tribunal. Question No. 3 is answered in favour of the Revenue and against the assessee. Question No. 4 is answered in favour of the Revenue and against the assessee. Question No. 5 is answered in favour of the Revenue and against the assessee. Question No. 6 is remanded to the Tribunal. For the assessment year 1979-80: Que ..... X X X X Extracts X X X X X X X X Extracts X X X X
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