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TMI Blog1994 (8) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case, the applicant is not entitled to the full deduction of the expenditure under section 35B having regard to the fact that the entire activity of the applicant was export business? 3. Whether, on the facts and in the circumstances of the case the Tribunal was right in its view that the commission on exports paid in India is not entitled to relief under section 35B? 4. Whether, on the facts and in the circumstances of the case, the Tribunal was right in disallowing any portion of export freight and shipping?" The references relate to the assessment years 1976-77 and 1977-78 relevant to the accounting years ending on July 31, 1975, and July 31, 1976, respectively. The assessee-firm derives income from the export of eng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------------ For the assessment year 1977-78, the claim was made in respect of a sum of Rs. 25,98,830 consisting of the following amounts : Rs. Rs. Trade samples 4,915 Export promotion tour 54,771 Commission on exports 3,39,936 Export postage 10,307 Over price 62,845 Export packing and forwarding 4,24,500 Export freight and shipping 14,53,017 Export insurance 68,178 ------------------ 24,18,469 Rs. Rs. 24,18,469 Claim for proportionate weightage : Electricity 17,332 Printing and stationery 40,467 Books and periodicals 3,798 Telephones 12,201 Advertisement 37,785 Publicity 10,033 Salaries 67,033 Bonus 22,494 1,80,361 35.4 per cent. thereof --------------- Total amount entitled to weighta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed as weightage deduction is allowable under section 35B without any curtailment. Learned standing counsel for the Revenue pointed out that even though the assessee was carrying on business in export of goods and the major part of the sale was on the export side, the claim for relief under section 35B was in respect of items of expenditure which fell under sub-clause (iii) of clause (b) of section 35B(1). According to learned standing counsel, the expenditure incurred in India under this head cannot be allowed and where the expenditure came under carriage or freight or insurance, it should be disallowed. On the other hand, the assessee's counsel further submitted that the expenditure in respect of which section 35B relief is claimed falls ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of the estimate. The Tribunal pointed out that expenditure to the extent of Rs. 55,282 towards postage and telegram, packing, printing and stationery, etc., would come under sub-clause (iii), but the entire expenditure in this regard cannot be related to the export activity covering distribution, supply and provision of goods and services, etc., outside India. The Tribunal further pointed out that expenditure under the head of postage, packing, telephone, electricity, etc., would have to be incurred also in respect of local activities connected with procurement and running of the assessee's establishment. Therefore, according to the Tribunal, the entire amount of Rs. 55,282 cannot be considered as pertaining to export activity. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated to be spent outside India.Therefore, this item was held to be eligible for full relief. Since the commission on export of Rs. 38,459 paid in India is not relatable to export trade, relief under section 35B was not granted. Thus, for the assessment year 1976-77, relief was granted under section 35B on a sum of Rs. 52,352. So also for the assessment year 1977-78, relief was granted under section 35B on a sum of Rs. 2,52,672 (trade samples Rs. 4,915, export promotion Rs. 5,471, packing and forwarding Rs. 62,845 and in respect of samples Rs. 40,000) expenditure under electricity, printing and stationery, etc., Rs. 90,180 (half of 34.4 per cent. claim). Thus, in the absence of proper particulars, the Tribunal estimated the expenditure relat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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