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TMI Blog1997 (3) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... n 35B(1)(b) of the Act, in respect of (1) air freight, (2) railway freight, (3) insurance, (4) difference due to exchange fluctuations, (5) interest and (6) rent and lighting, for the assessment years 1976-77, 1977-78 and 1978-79 ?" The assessee claimed, during the course of assessment proceedings for the assessment years 1976-77, 1977-78 and 1978-79, weighted deduction under the provisions of section 35B of the Act in respect of the following expenditure : --------------------------------------------------------------------------------------------------------------------------------------------------- 1976-77 1977-78 1978-79 ------------------------------------------------------------------------------------------------------------ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bar imposed by section 35B(1)(b)(iii) of the Act. As regards the expenditure claimed due to exchange fluctuation, the Appellate Tribunal was of the view that the liability which arose due to exchange fluctuation is a normal business expenditure and it is not peculiar to the export business. Therefore, the Appellate Tribunal held that the assessee was not entitled to claim weighted deduction in respect of the expenditure incurred due to exchange fluctuation as well. In so far as the interest to the bank is concerned, the Appellate Tribunal found that the interest was paid by the assessee to the bank for the amount of capital borrowed for the purpose of business, and, hence, the assessee was not entitled to weighted deduction on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e conclusion that the expenditure incurred by the assessee due to exchange fluctuation cannot be brought within any of the enumerated items found in section 35B(1)(b)(iii) of the Act. Secondly, the exchange fluctuation has nothing to do with the marketing expenditure of the assessee, and the said expenditure can only be regarded as normal business expenditure and not export marketing expenditure. In this view of the matter, we are of the view that the Tribunal was correct in holding that the assessee was not entitled to marketing expenditure incurred due to exchange fluctuation as well. In so far as the claim of the assessee for weighted deduction in respect of interest paid to the bank is concerned, this court in T. C. No. 1302 of 1982 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and manufacturing expenses cannot be brought under section 35B of the Act. It is well established that the manufacturing expenses incurred by the assessee can be regarded as pre-marketing expenditures and they cannot be regarded as marketing expenditures eligible to be allowed as weighted deduction under section 35B of the Act. Admittedly, the expenses incurred by the assessee do not relate to the export marketing, and in the absence of any proof that the expenditure was incurred with reference to any of the items found in section 35B of the Act, it is not possible for the assessee to claim weighted deduction in respect of manufacturing expenses. Hence, we reject the contention of the assessee that the assessee would be entitled to claim w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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