9911796707
TMI Blog1997 (11) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Tribunal was right in disallowing the claim for interest deduction claimed under section 35B in respect of the commission paid to local agents of foreign buyers in India?" In the question referred, the words, "claim for interest deduction" must be is read as claim for weighted deduction and, accordingly, the word, "weighted" is substituted in the place of the word, "interest" in the question of law referred to us in both the tax cases. The assessee claimed weighted deduction under section 35B of the Act on certain commission paid to agents of the foreign buyers in India. The Income-tax Officer, in the assessment proceedings for the assessment years 1979-80 and 1980-81, disallowed the claim of the assessee for weighted deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd CIT v. Hero Cycles P. Ltd. [1997] 228 ITR 463. We have carefully considered the submissions of learned counsel for the assessee as well as learned counsel for the Revenue. The Income-tax Officer as well as the Commissioner of Income-tax (Appeals) disallowed the claim of the assessee for weighted deduction on the ground that the assessee was not entitled to claim weighted deduction as the commission was paid in India. The Appellate Tribunal on the basis of the decisions of this court in CIT v. Southern Sea Foods (P.) Ltd. [1983] 140 ITR 855 and V. D. Swami and Co. P. Ltd. v. CIT [1984] 146 ITR 425, held that the commission was paid in India and the assessee was not entitled to weighted deduction under section 35B of the Act. From the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be incurred in India. Every case will have to be examined in the light of the provisions of the sub-clauses and the facts proved by the assessee." The same view has also been taken by the Supreme Court in CIT v. Hero Cycles P. Ltd. [1997] 228 ITR 463, wherein the Supreme Court held as under : "The question relates to expenditure for which relief was claimed under section 35B. The Tribunal allowed the expenditure without specifically deciding under which sub-clause of clause (b) of section 35B(1), the expenditure falls. The case is remanded back to the Tribunal. The Tribunal will re-examine the case having regard to the nature of the expenditure and will try to find out whether such an expenditure qualifies for weighted deduction under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Supreme Court, it is seen that the assessee had not obtained information regarding markets outside India of such goods, services or facilities. and therefore, it was held that the assessee was not entitled to weighted deduction for the payment of commission to the middleman. However, as already indicated, the duty is on the part of the assessee to prove before the Appellate Tribunal that the expenditure would qualify for weighted deduction under any one of the sub-clauses of clause (b) of sub-section (1) of section 35B of the Act and since the Tribunal has not gone into that question and rejected the claim of the assessee, on the ground that the commission was paid in India, we are of the opinion, the Tribunal should rehear the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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