9911796707
TMI Blog1984 (11) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... peal before us. 2. As regards item No. (iii) above, for the reasons stated in our orders in IT Appeal Nos. 208 and 209 (Bang.) of 1982 dated 28-5-1984, we agree with the Commissioner (Appeals) and dismiss the ground raised by the assessee. Bank charges do not also qualify for weighted deduction in the light of the decision of the Special Bench of the Tribunal in J.H. & Co. v. Second ITO 1 SOT 150 (Bom.). 3. This leaves us with the claim for weighted deduction on interest paid to banks on packing loan and export bills. The interest is paid on loans advanced by banks in connection with export of goods. The loans are advanced at subsidised rate of interest. The method of obtaining packing credits appears to be as follows: "The assessee cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under sections 144A and 144B of the Act for the assessment year 1978-79. The Commissioner (Appeals) agreed with him and the assessee is in appeal. 4. The learned counsel for the assessee submitted that an Indian exporter could not compete with the foreign exporter under normal conditions because of the high cost of production of goods here. In order to promote exports, banks were permitted to advance loans at favourable rates of interest to exporters. Since export could not have taken place but for these soft loans, it was argued that interest paid on these loans was an expenditure wholly incurred for the purposes of export and was entitled to weighted deduction under section 35B(1)(b)(viii) being expenditure incurred in the performance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence between loans obtained at ordinary rates of interest in the market and the concessional loans. Interest paid on all loans would have been entitled to weighted deduction because all the loans were obtained for the export business. We do not see any valid distinction between the two types of loans. We have already stated that no expenditure was incurred by the assessee in obtaining the credit. This is an expenditure incurred after the credit is obtained. The ratio of the decision of the Karnataka High Court in Ullal Narayan Mallya & Sons' case would apply to the issue before us. Section 35B(1)(b)(viii) would apply only to such expenditure which are of the nature of an after sales service. Interest would, therefore, fall out of the pale o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
