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TMI Blog1998 (3) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 35B of the Income-tax Act, 1961, on the following expenses: (a) Insurance charges on export sales---Rs. 71,903 (b) Freight from factory to port---Rs. 6,90,260 (c) Ocean freight---Rs. 7,17,883 The assessee is a company manufacturing AAC and ACSR conductors. During the assessment year 1978-79, the assessee had export sales of Rs. 2.98 crores and local sales of Rs. 2.15 crores. The assessee claimed weighted deduction under section 35B of the Act at Rs. 16,52,219 as per revised return as against Rs. 3,77,886 claimed in the original return. The Income-tax Officer allowed weighted deduction of Rs. 1,84,044. The assessee carried the matter to the Commissioner of Income-tax (Appeals) and further to the Income-tax Appellate Tribunal cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at incurred wholly and exclusively on---.. (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, where such expenditure is incurred before the 1st day of April, 1978... (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..." Learned counsel for the petitioner-assessee submitted that sub-clause (viii) was a residuary entry and wide in its application. If an it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... falls within two sub-clauses at the same time and one of them denies the benefit while the other allows the benefit, then the assessee should be permitted to claim the benefit by reference to the other entry and allowed such benefit. Learned standing counsel for the Revenue has submitted that the Legislature having specifically expressed its intention to deny the benefit of weighted deduction to a particular head of expenditure, the legislative intent cannot be defeated by providing the item of expenditure an entry into the home of benefits through another door though turned out from one door. Having heard learned counsel for the parties, we are of the opinion that the benefit as claimed by the assessee has rightly been denied by the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bombay High Court in Forbes Forbes Campbell Co. Ltd. v. CIT [1994] 206 ITR 495 dissented from and did not follow the abovesaid Punjab High Court view. The Division Bench held as under : "The only question that survives for consideration is whether, in such a situation, weighted deduction can be claimed by the assessee on expenditure on freight and insurance, etc., under sub-clause (viii). In other words, whether despite the specific prohibition in sub-clause (iii) on allowance of weighted deduction on freight and insurance, it can be allowed by resort to sub-clause (viii). The answer, in our opinion, has to be in the negative. It is a well-settled principle of interpretation that a statute must be read as a whole and every provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein the conditions and restrictions on the allowability of weighted deduction thereon has been laid down." The Bombay decision in Forbes Forbes Campbell and Co. Ltd.'s case [1994] 206 ITR 495 was brought to the notice of a subsequent Division Bench of the Punjab and Haryana High Court in Vijay Kumar Aggarwal v. CIT [1998] 232 ITR 179. The Division Bench chose to follow the earlier Division Bench view of its own High Court and not the view taken by the Bombay High Court. The Punjab and Haryana High Court view is based on the principle that the basic approach for the grant of weighted deduction in respect of an expenditure on the development of export was primarily to provide an incentive for promoting export on a continuing basis; it was, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... insurance of such goods while in transit in sub-clause (iii) which deals with distribution, supply or provision of goods meant for export. The manifest intention of the Legislature cannot be defeated by giving an extended meaning to the provision of sub-clause (viii) so as to allow weighted deduction on the said expenditure. It is difficult to comprehend why the Legislature should forbid specifically and in clear words deduction of expenditure incurred on the carriage of goods to their destination outside India or on the insurance of such goods while in transit but at the same time allow these very expenditures as a deduction under sub-clause (viii) by implication. The clear language of sub-clause (viii) does not warrant such a constructio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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