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TMI Blog1983 (7) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal was justified in disallowing a part of the interest as not being deductible under section 36(1)(iii) of the I.T. Act, 1961, out of the interest paid by the assessee-company on its borrowings? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was not entitled to weighted deduction under section 35B of the I.T. Act, 1961, in respect of transportation and freight expenses and on foreign travelling expenses of directors incurred towards export sales? " The material facts giving rise to question No. 1 are as follows, The assessee is a company engaged in the manufacture of electrodes and various other goods. For the assessment years 1975-76 and 1976-77, the ITO disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our answer to question No. 1 referred to us is in the negative and against the Revenue. The facts giving rise to question No. 2 referred to above are as follows? The assessee claimed weighted deduction under s. 35B of the Act in respect of transportation and freight expenses and on foreign travelling expenses of directors incurred towards export sales. The ITO did not allow weighted deduction in respect of transportation and freight expenses, As regards the deduction in respect of travelling expenses the assessee claimed deduction amounting to Rs. 9,100 under the said head. However, the ITO allowed the deduction to the extent of Rs. 7,000. The order passed by the ITO was upheld by the Commissioner (Appeals) and also by the Income-tax Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 outside India or on the insurance of such goods while in transit. " A Division Bench of this court in CIT v. K. N. Oil Industries [1982] 134 ITR 651, had occasion to construe, the provisions of cl. (b)(iii) of s. 35B(1) of the Act. It was held that (p. 653): " The second part of the clause which starts with the words ' not being ' and which was added by the Finance Act, 1970, deals with the expenditure which is not to be taken into account in granting the development allowance. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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