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TMI Blog1988 (12) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... 1)(b)(viii) r/w Expln. 2 substituted by the Finance (No.2) Act, 1981 (hereinafter referred to as the Finance Act) w.e.f. 1st April, 1981, the learned representative for the Revenue vehemently argued that the CIT(A) was not justified in accepting the assessee's submissions regarding weighted deduction in respect of the aforesaid items. In this connection, he also pointed out that Sub-cl. (viii) of s. 35B(1)(b) too was omitted by the Finance Act w.e.f 1st April, 1981. Thus, according to him, since the said Explanation starts with the words "For the removal of doubts", we have to interpret the same as declaratory in nature. In support of this submission he relied on the order of the Tribunal in the case of Kwality Textile Associates (P) Ltd. vs. ITO (1988) 24 ITD 454 (Mad). He also stressed the point that the items mentioned above were in the nature of purchasing and manufacturing expenses ordinarily debitable to Trading Manufacturing Account and not to the Profit Loss Account. He, therefore, urged that the order of the CIT(A) on this point should be set aside and that of the ITO should be restored. 5. The learned representative for the assessee, on the other hand, strongly sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cording to him, the said Circular had not prohibited allowing weighted deduction on the items similar to one mentioned above, but had stated that "It may be added that no general rule can be laid down in this regard. Much depends on the nature of the contract and each case has to be decided in the light of its own facts". Therefore, according to him, keeping in mind the aforesaid decision of the Hon'ble Supreme Court in the assessee's own case, the contracts entered into by the assessee with the foreign parties were indivisible contracts and, therefore, the CIT(A) was fully justified in granting weighted deduction on the items mentioned above. He also invited our attention to the Memorandum explaining the provision of Finance (No. 2) Bill, 1980, (1980) 123 ITR 173 (Stat), more particularly paragraphs 108 and 109 which read as under: "108. It has further been observed that certain taxpayers who had engaged labour for construction projects outside India had claimed the benefit of weighted deduction in respect of the cost of labour and raw materials incurred thereon. It was contended that such expenditure was incurred for the performance of services outside India in connection with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at fact by itself, would not suggest that the Revenue had accepted the decision of the CIT(A) on merits. He further submitted that when the interpretation of certain provisions of the Act could be made without the aid of the speeches made in the Parliament or contents of the Memorandum explaining the provisions of a Finance Act, we should not be influenced by the fact that in para 109 of the Memorandum explaining the provisions of Finance (No. 2) Bill, 1980, the assessment year mentioned is 1981-82. He once again relied on the order of the Tribunal reported in 24 ITD 454 submitted that it is no doubt true that in the said order the Tribunal was concerned with sub-cl. (iii) of s. 35B(1)(b), however, since, according to him, there is no difference between sub-cls. (iii) and (viii) of the said section, we should follow the said order of the Tribunal. 7. We have carefully considered the rival submissions of the parties and the material available on record and we find considerable force in the submissions made on behalf of the assessee. According to us, if we were to accept the submissions made on behalf of the Revenue, then weighted deductions allowed by the ITO himself under s. 35B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the expenditure incurred on these items, we should uphold the order of the CIT(A). 9. On due consideration of the rival submissions of the parties, here also we do not find any justification to interfere with the order of the CIT(A) which, according to us, is quite fair and reasonable. We would, therefore, uphold the order of the CIT(A) on this point. 10. The next point pertains to allowing the assessee's claim for deduction of water charges in computing the income from house property. The learned representative for the Department once again relied on the order of the ITO and submitted that the order of the CIT(A) on this point should be reversed. The learned representative for the assessee, on the other hand, invited our attention to the order of the CIT(A) on this point and pointed out that he had followed the order of his predecessor for the asst. yr. 1978-79. He made a statement at the Bar that the action of the CIT(A) for the asst. yr. 1978-79 has been upheld by the Tribunal. Further, he invited our attention to page 26 of his paper book containing the assessee's letter dt. 24th April, 1968 addressed to Shri M.R. Morarka (the tenant), particularly para 3 of the said l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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