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TMI Blog2000 (11) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... t in holding that the leviability and the quantum of interest charged under sections 139(8) and 217 of the Income-tax Act can be challenged by the assessee in appeal filed under section 246(1)(c) of the Act ? 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right inholding in the manner it has done that weighted deduction was allowable on : (1) establishment expenditure ; (2) rent, rates and taxes expenditure ; (3) stationery and printing expenditure, postage, telegram, tele phone and telex expenditure; (4) export sale promotion expenditure ; and (5) commission ?" This reference pertains to the assessment year 1978-79. The assessee is a registered firm engaged in the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question would be covered and without having any relevant material to show that the expenditure under consideration did fall under any of those sub-clauses. So far as the first question is concerned, the controversy raised therein now stands concluded by the ratio of the decision of the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961. In that case, the question before the Supreme Court was whether orders levying interest under sub-section (8) of section 139 and under section 215 are appealable under section 246 of the Income-tax Act, 1961. The Supreme Court held : "Clause (c) of section 246 provides an appeal against an order where the assessee denies his liability to be assessed under the Act or agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. It will be open to the assessee to dispute the levy of interest in appeal subject to the limits laid down by the Supreme Court in the above decision." In view of the above we are of the opinion that levy of interest being a part of the process of assessment, it is open to the assessee to dispute the levy in an appeal under section 246(1)(c) of the Act provided he limits himself to the ground that he is not liable to the levy at all. Question No. 1 is answered accordingly. The controversy in the second question pertains to allowance of weighted deduction under section 35B of the Act in respect of various items of expenditure. The grievance of the Revenue is that there is nothing in the order of the Tribunal to show under which sub-cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tems of expenditure. The Supreme Court interpreted section 35B of the Act and held : "In order to get this deduction, the assessee will have to prove that the expenditure was incurred during the previous year wholly and exclusively for the purposes set out in clause (b) of section 35B(1). There cannot be any blanket allowance of the expenditure nor can there be any blanket disallowance. Every case has to be discussed specifically and the expenditure must be found to be of the nature mentioned in any one of the sub-clauses. If the expenditure does not fall in any of these categories, it cannot be allowed as a deduction. Some of the sub-clauses provide that if the expenditure is incurred in India, it cannot be allowed but in some of the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to costs." The legal position in regard to the allowability of weighted deduction under section 35B of the Act has been reiterated by the Supreme Court in CIT v. Hero Cycles Pvt. Ltd. [1997] 228 ITR 463 in the following words : "The deduction is permissible if the expenditure is laid out wholly and exclusively for the purposes mentioned in clause (b) of section 35B(1). It is for the assessee to prove that the entire expenditure involved was exclusively for the purposes mentioned in clause (b) of section 35B(1). The Tribunal has also to give a finding as to the entitlement of the assessee with reference to the particulars of clause (b) of section 35B(1). The facts have to be found out and the law has to be applied to those facts." On a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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