1998 (12) TMI 67

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..... ts and in the circumstances of the case, the Appellate Tribunal is right in holding that the assessee is entitled to the allowance of weighted deduction under section 35B of the Income-tax Act in respect of the expenses incurred and debited under the heads inland travelling, printing and stationery, telephone, rent, car expenses, advertisement, workers' welfare, gratuity, property tax and miscellaneous expenses ?" The assessee was engaged in the manufacture and sale of hand tools. Sales were made by exports outside India to the extent of 77.91 per cent. of the total sales during the previous year relevant to the assessment year 1979-80. The assessee claimed deduction under section 35B of the Act for total expenditures amounting to Rs. 6,47 .....

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..... ect of expenditures on establishment, travelling, postage and telegrams, telex, printing and stationery, telephone, etc. The Revenue went in appeal before the Tribunal against the appellate order of the Commissioner. The Tribunal remitted the matter to the Commissioner of Income-tax (Appeals) for fresh determination of expenditure on establishment amounting to Rs. 80,081 so as to adopt the percentage of expenditure keeping in view the order of the Tribunal for the preceding year. Certain other items of expenditure were also required to be examined afresh. The expenditures mentioned in the question, reproduced in para. I above, would qualify for the purposes of deduction under section 35B of the Act if these expenditures fall under any of .....

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..... uch cases, the expenditure may or may not 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." In the light of the aforesaid observation of the Supreme Court, it is necessary to see that the expenditure distinctly falls under clause (b) of section 35B(1). Since none of the expenditures mentioned in the question falls under any of the sub-clauses of clause (b) of section 35B(1) of the Act, these cannot be said to be eligible for deduction. The question is, therefore, answered in the negative, i.e., in favour of the Revenue and against the assessee, However, in case certain expenditures under any head have been allowed for deduction under section .....

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