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TMI Blog1982 (5) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... ew that the assessee is entitled to the claim under section 35B in respect of entire commission paid to the directors. 2. It is argued by the learned departmental representative that once disallowance is made under section 40(c) relating to the commission paid to the directors, a claim under section 35B must be confined to that amount and not to the entire amount claimed by the assessee as expenditure incurred by it. The argument proceeds on the basis that when the Legislature has restricted the allowance of expenditure in a particular manner, the same standard or norm should be applied while giving weighted deduction under section 35B. The learned departmental representative also contended that section 40(c) opens with a non obstante clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If there is a doubt to the correct meaning of the provisions of statute, the benefit of doubt must go to the taxpayer. (c) The legal fiction envisaged under section 40(c) cannot be extended beyond the purpose for which it was created. (d) A court cannot add words and phrases to the language of the provision of the Act. Section 35B, Mr. Vyas continued, was meant for giving a relief to the exporters in order to encourage export. It is a self-contained code by itself and cannot be hit by any other provision. In reply, the learned departmental representative, equally referred to some general principles like (1) when there is no ambiguity in the language, of the statute, there is no question of giving any benefit of doubt to the taxpayer, ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Rs. 72,000 for each director, the claim for weighted deduction under section 35B should be restricted in the same manner. In our opinion, the revenue is right in restricting the weighted deduction in accordance with the ceiling under section 40(c). On a plain reading of the provision of section 40(c), the relevant portion of which is reproduced below, it is clear that, irrespective of the provision of sections 30 to 39, there is a restriction in regard to the deduction of expenditure referred to in section 40(c): "Notwithstanding anything to the contrary in sections 30 to 39, the following amounts shall not be deducted in computing the income chargeable under the head 'Profits and gains of business or profession':--- It is also obvious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed. Accordingly, the expenditure that can be allowed is only up to Rs. 72,000. But for section 35B the assessee would be entitled to the expenditure of Rs. 72,000. Only by application of section 35B, can it be said that the assessee is entitled to the entire expenditure+one-third of the same, ignoring the ceiling. We are clearly of the view that there cannot be a different standard for allowing the expenditure under section 35B. It is not as though Rs. 72,000 is allowed as regular expenditure by applying section 40(c) and additional expenditure of 1/3rd is allowed under section 35B. Section 35B envisages an allowance of expenditure to the extent of 1/3rd. In the ordinary course the expenditure to be allowed would be under section 37 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 40 and those of section 35B. In section 40(c), the expression used is "the following amounts shall not be deducted". In section 35B, the assessee will be allowed a deduction of "...." (sic). Both contemplate deduction of amounts in computing chargeable income of the assessee. Section 35B is, undoubtedly, a provision by which a deduction is contemplated while computing the income of the assessee. The quantum of deduction of expenditure incurred is increased by 1/3rd of the amount incurred. Therefore, once we get the restriction under section 40(c) in regard to the allowance of expenditure, such restriction is automatically applicable in determining the deduction to be allowed under section 35B. It is not that section 35B does not speak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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