9911796707
TMI Blog1995 (11) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of the following items : Rs. Ps. (1) Railway freight 2,32,997.45 (2) Assessment fees mudadani loading charges 23,747.78 (3) Weighment charges 243.25 (4) Godown rent 5,909.25 (5) Book charges 2,264.40 (6) Custom ship bill 120.00 (7) Bardana 3,018.47. " The assessee, Rathi Gum Industries, Jodhpur, for the assessment year 1979-80 claimed weighted deduction under section 35B of the Income-tax Act, 1961, on various items of expenses aggregating to Rs. 4,13,959.35. The Inspecting Assistant Commissioner, i.e., the assessing authority, allowed the claim of the assessee to the tune of Rs. 380 only on some of the items. Dissatisfied with the order passed by the assessing authority, the assessee preferred an appeal before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove question for the opinion of this court. There was a divergence of the opinion of various High Courts on the question : which expenses qualify for any deduction under section 35B of the Act ? The Central Board of Direct Taxes, therefore, issued the following guidance to the authorities subordinate to it. Instruction No. 1441, issued by the Central Board of Direct Taxes reads as under : " Instruction No. 1441-XVII/1/1993, dated 28th December, 1981:-- Deduction under section 35B.--Tribunal's decision in the case of J. Hemchand and Co. (I. T. A. Nos. 3255 and 3330/(Bom) of 1976-77 dated 7th June, 1978)--Clarification regarding-- 'Attention is drawn to the Board's Instruction No. 1302, dated 29th January, 1980. It was clarified the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the language of the section. The court further observed that where the Legislature desired to exclude the expenditure incurred in India for the purposes of giving the benefit of weighted deduction, it expressly did so by specifically mentioning such exclusion in sub-clause (iii). 3. Then came the decision of the Special Bench of the Tribunal at Bombay in the case of J. Hemchand and Co. which laid down the following propositions of law in paragraphs 22 and 23 of its order dated 17th June, 1978. These are as under : (a) Except for the purpose of sub-clause (iii), the place where the expenditure is incurred is irrelevant and any expenditure satisfying the conditions laid down in sub-clauses (i), (ii) and (iv) to (viii) will get the bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... controversial and not acceptable to the Department. In particular, its decision to allow 75 per cent. of salary of persons handling export business could still be a matter of dispute, because though accepting that the assessee's employees as part of their duty could not have avoided attending also to such work as falls within the excluded category in sub-clause (iii), it decided to apportion only 25 per cent. of the expenditure on salaries, etc., attributable to excluded activities. But for upholding 75 per cent. thereof as admissible for weighted deduction it did not at all discuss the nexus of such expenses with the purposes or activities specified in the other sub-clauses. In other words, the claim with regard to 75 per cent. of the sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of CIT v. Orient Co. (P.) Ltd. (F. No. 270/155/80-ITJ)." The case of the assessee was decided by the Tribunal on the basis of the judgment of the Special Bench of the Tribunal, Bombay, in the case of J. Ramchandra and Co. (J. Hemchand and Co. (?)). The Central Board of Direct Taxes, looking to the conflicting views taken by the various High Courts, issued the abovenoted instructions clarifying the earlier circulars. In this view of the matter, we are of the opinion that the case of the assessee requires reconsideration by the Tribunal in the light of Instruction No. 1441 issued by the Central Board of Direct Taxes. The reference is, therefore, returned unanswered to the Tribunal with the direction that the Tribunal should deci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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