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TMI Blog1981 (7) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment years 1970-71 and 1971-72 ? " The assessee is a partner in a firm known as Chitra Palayacat Co., Penang, which is a non-resident firm and which carries on business in Malaysia. It does not have a branch in India. For the assessment year, 1970-71 the assessee admitted an income of Rs. 8,845 from the said firm, and claimed a deduction of Rs. 19,313 as allowable expenditure under s. 35B of the Act. By his order dated 5th July, 1971, the ITO determined the taxable income at Rs. 17,880 accepting the aforesaid claim of the assessee. The Addl. Commissioner was of the view that the assessee was not entitled to such an allowance and he, therefore, took proceedings under s. 263 of the Act and passed an order on 30th May, 1973, withdrawing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the provisions of s. 35B of the Act could be applied. For the Department the submission was that, the assessee was not carrying on the business of export of goods from India, that the provision does not apply to the import of goods from the non-resident firm in the present case and that the assessee can get deduction only to the extent provided in s. 67(3) of the Act or of an amount which could be taken to have been spent wholly and exclusively for the purpose of earning the share income from the firm. In the present case it was contended that the assessee did not qualify himself for deduction either under s. 67(3) of the Act or under the general concept of deduction of expenditure to earn the share income. Section 35B provides what is k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at relates to expenditure on prescribed categories of activities for the promotion of the sale outside India of the goods. We are not also concerned with such residuary category. A perusal of the provision would go to show that the whole provision is intended to develop the export markets for Indian goods. The country is badly in need of foreign exchange, and this is one of the incentives granted to the assessees in India to export their goods from India and earn foreign exchange in the bargain. The way in which the provision is designed goes to show that the expenditure must have been incurred in effecting exports from, India. In the present case, the Tribunal has found that the firm in question did not export any goods from India and its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had by the assessee who carried on the business through the mechanism of the partnership. Even assuming that this line of decisions is applicable to a case like this, still, we consider that the assessee's claim fails on the ground that neither the assessee nor the firm of which he is a partner did export any goods from India. The learned counsel for the assessee admitted that the firm only imported goods from India and, therefore, the assessee is only in the position of an importer who is not liable to be brought within the scope of s. 35B. Our attention was also drawn to another decision rendered by us in CIT v. Kasturi Palayacat Co. [1979] 120 ITR 827 (Mad). That was a case where there was an export by the assessee. But the contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. T. C. Nos. 126, 127 and 128 of 1977: In this common reference for the assessment years 1970-71, 1971-72 and 1972-73, the question of law referred to this court is as follows : " Whether, on the facts and in the circumstances of the case, the assessee is not entitled to weighted deduction of Rs. 19,313, Rs. 2,99,415 and Rs. 1,38,800 from his share income from the firm of M/s. Chitra Palayacat Co. under s. 35B of the I.T. Act, 1961, for the assessment years 1970-71, 1971-72 and 1972-73 ?" The assessee is another partner of the same firm in Malaysia which was the subject-matter of consideration in T.C. Nos. 56 and 57 of 1977. The facts in this case are not different from those discussed in the other, and in fact the contentions were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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