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TMI Blog1993 (11) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... onditional subsidy received from the Rajasthan Government under the subsidised housing scheme for industrial workers did not form part of the 'actual cost' of the labour colony under section 43(1) and, consequently, the assessee-company was not entitled to get deduction for depreciation of Rs. 4,820 on the said amount under section 32 of the Income-tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case and in law the Tribunal was right in holding that weighted deduction under section 35B of the Income-tax Act was not allowable in respect of expenditure of Rs. 3,25,506 on freight, packing charges, etc., and in respect of Rs. 4,287 being 25 per cent. of salary of staff looking after export business?" The brief facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43(1) of the Income-tax Act, 1961. The Tribunal has found that the said amount has to be deducted for the purpose of determining the actual cost-under section 43(1) of the Income-tax Act, 1961, for the reason that the amount of the subsidy was not required to be repaid by the assessee to the State Government. The Tribunal has not accepted the submission of the assessee that in case the assessee-company made a default in repaying any of the instalments of the loan of Rs. 4,17,000, the said subsidy was repayable with interest from the date on which the subsidy was given by the State Government. The Tribunal has held that it was common ground that the assessee-company did not commit any default in repayment of the instalments of the loan to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 2, it was found in the assessment year 1976-77 that the freight and packing charges of Rs. 3,25,506 and staff salary to the extent of 25 per cent. was disallowable. The provisions of section 35B(1)(b)(iii) provide that the expenditure referred to in clause (a) is that 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. The above clause was amended by the Finance Act, 1970, with retrospective effect from April 1, 1968, for (iii) distribution, supply or provision outside India of such goods, services or facilitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de India" and, therefore, no weighted deduction in respect of packing charges was allowable. In J. M. A. Industries Ltd. v. CIT [1993] 200 ITR 210, the Delhi High Court has held that a claim for weighted deduction under section 35B of the Income-tax Act, 1961, is not admissible for expenses incurred on freight, packing charges, etc., and paid in India. In Jayshree Tea and Industries Ltd. v. CIT [1993] 202 ITR 695 (Cal), it was held that the assessee is not entitled to weighted deduction under section 35B on the expenses incurred on freight and insurance. The Bombay High Court in M. H. Daryani v. CIT [1993] 202 ITR 731 has held that even if the expenditure falls within section 35B(1)(b)(iii), the expenditure incurred in India in connecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age of goods to destinations outside India or on the insurance of such goods while in transit is not allowable. The Delhi High Court in CIT v. Raunaq International Ltd. [1986] 158 ITR 701 has held that the percentage of expenditure on which weighted deduction is to be given is a question of fact. The expenditure incurred by the assessee for payment of salary to its staff was considered to the extent of 75 per cent. as representing the work for handling the export business of the assessee. The assessee is carrying on the business of effecting sales within India as we as export out of India and, therefore, a finding has been given that out of the claim of salary, only 75 per cent. was to be allowed as pertaining to the export and 25 per c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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