9911796707
TMI Blog1998 (12) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the assessee was entitled to the export markets development allowance by way of weighted deduction in terms of section 35B of the Income-tax Act, 1961, in respect of the following expenditure : Rs. (a) Bank commission of foreign bills 19,578 (b) Interest paid to bank on foreign bills 3,66,032 (c) Transit insurance charges 95,947 (d) Clearing and forwarding charges 18,59,050 (e) Carriage outward expenses 2,97,532 2. Whether on the facts and in the circumstances of the case, the expenditure of Rs. 7,095 as under spent by way of business expenditure is in the nature of entertainment expenditure so as to call for disallowance: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign bills. Any deduction under section 35B has to be allowed if the expenditure has been incurred wholly and exclusively for any of the purposes set out in sub-clauses (i) to (ix) of clause (b) of section 35B(1) of the Act. It was necessary for the assessee to show and prove that commission as well as interest paid to the bank on foreign bills fell under any of the aforesaid sub-clauses. The Supreme Court in CIT v. Stepwell Industries Ltd. [1997] 228 ITR 171, has held as under (page 174) : "In order to get this kind of deduction, the onus lies heavily on the assessee to prove that the expenditure falls within any of the purposes set out in the various sub-clauses of clause (b) of section 35B(1). Merely because some activities took pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : "(iii) distribution, supply or provision outside India of such goods, services or facilities, not being expenditure incurred in India in connection therewith or expenditure (wherever incurred) on the carriage of such goods to their destination outside India or on the insurance of such goods while in transit." In the light of the specific bar contained in sub-clause (iii), expenditure incurred on the carriage of goods to their destination or on the insurance of such goods while in transit, is not qualified for deduction. Clearing and forwarding charges are also not covered under any of the sub-clauses of clause (b) of section 35B(1) of the Act. Learned counsel for the assessee has not been able to show as to which sub-clause would be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in India. In this sub-section also, the maximum amounts in respect of such expenditure have been specified. Expenditure in respect of the hotel bills for dealers and on providing dinner to foreign dealers does not appear to be in connection with advertisement, publicity and sales promotion in India. In the absence of such expenditure having been incurred in connection with advertisement, publicity and sales promotion, sub-section (3A) of section 37 is not attracted. Therefore, these expenditures would attract sub-section (2A) of section 37 of the Act. Similarly, money paid to the Diners Club would also not qualify for deduction, because it would also fall under sub-section (2A) of section 37. Any expenditure, which is in the nature of en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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