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TMI Blog1983 (11) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal is right in law in disallowing the claim under section 35B of the Income-tax Act in respect of packing, freight and insurance, cooly, trade expenses and legal expenses and all or any of the above items of expenditure ? " The assessee is a firm carrying on business in the export of handloom fabrics. It claimed weighted deduction under section 35B of the Incometax Act, 1961, in respect of the following expenditure: Rs. Salary 1,35,857 Rent 16,800 Packing 2,67,279 Freight and insurance 9,70,486 Cooly 39,422 Insurance and E.C. G.C. 81,374 Trade expenses 78,927 Legal expenses 15,000 -------------------- 16,05,146 -------------------- The Income-tax Officer declined to grant the weighted deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the items of expenditure should be taken to have been incurred by the assessee exclusively in connection with the export and, therefore, all the items of expenditure should have been allowed towards weighted deduction under section 35B of the Act. Alternatively, the learned counsel contends that even assuming that there were some sales in India, having regard to the fact that the local sale of handloom fabrics is only to the extent of one lakh of rupees as against the export value of one crore of rupees and more, all the expenditure should be deemed to have been incurred substantially for effecting export sales. He further submits that even if a proportion is to be Worked out, at 99.4 per cent. representing the export sale, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been incurred partly for export and partly for other activities in India, then the entire expenditure cannot have the benefit of weighted deduction under section 35B(1)(a), and it is only the expenditure which is referable to the actual export that will be entitled to the weighted deduction. The same provision excludes expenditure incurred in India in connection with the distribution, supply or provision outside India of such goods or any expenditure incurred on the carriage of such goods to their destination outside India or on the insurance of such goods while in transit. Thus, the expenditure like freight, insurance, packing, cooly, etc., incurred in India in connection with the export cannot be treated as an expenditure entitled for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relief of weighted deduction to 50 per cent. of the 99.4 per cent. Coming to the insurance premia paid to the Export Credit and Guarantee Corporation, since it is solely and exclusively relatable to the export trade, the Tribunal has granted the relief in its entirety. In respect of other items, the Tribunal has held that the assessee is not entitled to weighted deduction as these items clearly fall within the mischief of section 35B(1)(b)(iii) of the Act and these items have been specifically excluded. Here again, we find that the Tribunal is right in its construction of the provision in section 35B. Any item of expenditure by way of freight, cooly, packing, etc., will come within the expression " expenditure incurred in India in con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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