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TMI Blog1997 (7) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of the assessment for the assessment year 1976-77, the Assessing Officer allowed weighted deduction under section 35B of the Income-tax Act, 1961 (for short " the Act "), on the expenditure amounting to Rs. 1,64,577 only. The assessee had, however, claimed such deduction on a total expenditure, under different heads, of Rs. 12,04,147. The assessee, therefore, went in appeal and the Commissioner of Income-tax (Appeals) examined each item of expenditure on which weighted deduction had been claimed by the assessee and thereafter allowed expenditure amounting to Rs. 3,41,740, holding that such expenditure qualified for deduction under section 35B of the Act. While doing so, the Commissioner also took the view that certain other expenditure qualified for deduction to the extent of 50 per cent. of the total amount spent. Under the head " Establishment expenses ", weighted deduction was allowed by the Commissioner at 60 per cent. of the total amount of Rs. 4,46,010. Under the head " Export promotion expenses ", deduction of the entire expenditure amounting to Rs. 4,839 was allowed. Both the assessee and the Revenue carried appeals before the Tribunal. The assessee wanted full d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure 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. (iv) maintenance outside India of a branch, office or agency for the promotion of the sale outside India of such goods, services or facilities; (v) preparation and submission of tenders for the supply or provision outside India of such goods, services or facilities, and activities incidental thereto; (vi) furnishing to a person outside India samples or technical information for the promotion of the sale of such goods, services or facilities; (vii) travelling outside India for the promotion of the sale outside India of such goods, services or facilities, including travelling outward from, and return to, India; (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; and (ix) such other activities for the promotion of the sale outside India of such goods, services or facilities as may be prescribed. " Sub-clause (ix) is in the nature of a residuary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 of 1976-77 in the case of J. Hemchand and Co. v. Second ITO, B-11 Ward, Bombay. The claim was thus restricted to Rs. 36,488. The High Court found no error in the finding of the Tribunal, allowing Rs. 36,488 as weighted deduction under section 35B of the Act. The Calcutta High Court had also an occasion to examine a question of weighted deduction in respect of the head office expenses pertaining to export in Jayshree Tea and Industries Ltd. v. CIT [1993] 202 ITR 695. The assessee had incurred an expenditure of Rs. 1,79,760 being the head office expenses. The assessee had claimed weighted deduction in respect of that expenditure on the ground that it pertained to exports. The Income-tax Officer negatived that claim of the assessee by observing that the head office expenses were incurred in India and as such nothing can be allowed. In appeal, the Commissioner of Income-tax (Appeals) accepted the assessee's plea and directed the Income-tax Officer to allow weighted deduction to the assessee in respect of an amount of Rs. 71,210 out of the said claim of Rs. 1,79,760. The Tribunal upheld the deduction of the proportionate expenditure, as allowed by the Commissioner. The High Court no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness or activity also. As has been seen, the assessee had made exports of goods worth Rs. 72,58,000 against the total sales amounting to Rs. 92,61,902. In such a situation, deduction of 65 per cent. of the total expenditure appears to be appropriate. Question No. 1 is, therefore, answered in the affirmative in favour of the assessee and against the Revenue. Question No. 2 : A total amount of Rs. 4,839 was incurred by the assessee while receiving and treating foreign buyers. This expenditure has been shown under the head " Export promotion expenses ". The Assessing Officer had disallowed deduction to the extent of Rs. 2,000, treating it to be an expenditure in the nature of entertainment and inadmissible expenses. The Commissioner did not find any justification in the disallowance and, therefore, permitted weighted deduction for the whole amount of Rs. 4,839 under section 35B of the Act. A question regarding expenditure incurred by an assessee, holding a conference in India for promotion of export, was examined by the Calcutta High Court in CIT v. Bata India Ltd. [1989] 178 ITR 669. It was noticed that expenditure had been incurred for personnel from foreign countries in c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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