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TMI Blog1991 (1) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... ctured by Messrs. H. M. T. Ltd., on the ground that the assessee was not a dealer in the goods manufactured by Messrs. H. M. T. Ltd ? The assessment year with which we are concerned is the assessment year 1979-80. The assessee is a subsidiary of Messrs. H. M. T. Ltd. and is engaged in the export of products of, H. M. T. Ltd. and other allied engineering industries in India. For the assessment year in question; it claimed weighted deduction under section 35B in a sum of Rs. 2,24,84,860 and the Income-tax Officer allowed the claim subject to certain adjustments with which we are not here concerned. The order of the Income-tax Officer was found by the Commissioner of Income-tax to be erroneous and prejudicial to the interests of the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ", meant that the goods should be dealt with by the assessee as a dealer and that the services should be provided by the assessee in that behalf. Arising out of the order of the Tribunal is the question which we have quoted above. Section 35B, in so far as it is relevant, reads thus: "35B. (1)(a) Where an assessee, being a domestic company or person (other than a company) who is resident in India, has incurred after February 29, 1968, whether directly or in association with any other person, any expenditure (not being in the nature of capital expenditure or personal expenses of the assessee) referred to in clause (b), he shall, subject to the provisions of this section, be allowed a deduction of a sum equal to one and one-third times ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing 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 ; (ix) such other activities for the promotion of the sale outside India of such goods, services or facilities as may be prescribed." This section provides that where an assessee has incurred any expenditure referred to in clause (b) thereof he, shall be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned (see [1979] 120 ITR 827). We find that he has plainly misread the judgment. This was a case in which the Kuala Lumpur branch of the assessee had purchased goods worth 17,03,999 Malaysian dollars ; of these, goods worth 4,77,802 Malaysian dollars had been purchased from parties in India and the balance of the goods worth 12,26,197 Malaysian dollars had been purchased locally in Kuala Lumpur. The Madras High Court held that the assessee was eligible for the allowance of the expenditure mentioned in section 35B provided that the assessee had, in its foreign branch, dealt abroad in Indian goods exported from India. If the assessee had made only local purchases abroad, then there would be no scope for allowance of the weighted deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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