9911796707
TMI Blog1999 (11) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... e case, the assessee is entitled to weighted deduction under sub-clause (viii) of section 35B(1)(b) of the Income-tax Act in respect of interest on packing credit ? 2. Whether, on the facts and in the circumstances of the case, the circular/instruction dated December 28, 1981, relied on by the Tribunal has application to the claim/facts of the case ?" The factual position as set out in the statement of case is as follows : The assessee is a limited company engaged in the business of export of coir products. It claimed weighted deduction under section 35B of the Act, in respect of interest on packing credit amounting to Rs. 1,61,385. The Assessing Officer and the Commissioner of Income-tax (Appeals) (in short "the CIT (A)") did not allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing a company in which the public are substantially interested, the provisions of this clause shall have effect as if for the words 'one and one-third times', the words 'one and one-half times' had been substituted. (b) The expenditure referred to in clause (a) is that incurred wholly and exclusively on---. . . (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 ;" The expenditure referred to in clause (a) of section 35B(1)(b) has to be of the nature stipulated in the provision itself, i.e., it must have been incurred wholly and exclusively on performance of services outside India in connection with or incide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as indicated above, for the purpose of emphasis). It is, therefore, obvious from the certificate itself that the advance was given only for the purpose of purchasing raw materials for manufacturing/processing coir products to be exported out of India. The expenditure in order to qualify for weighted deduction is required to have been incurred wholly and exclusively on performance of services outside India in connection with, or incidental to, the execution of any contract for supply outside India of such goods. We are not concerned with the other categories, i.e., services or facilities. Purchase of raw materials which go into the ultimate finished product per se does not come under the provision. Interest charged by the bank was for adva ..... X X X X Extracts X X X X X X X X Extracts X X X X
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