9911796707
TMI Blog1978 (10) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... 866 due from Shri K.P. Bhatt proprietor of Silk India. In this connection it was the case of the assessee that Shri K.P. Bhatt used to supply hand-embroidered batwas to the assessee firm which were exported by the firm. It is also the case of the assessee that it used to give advance to Shri K.P. Bhatt against the order placed by the firm to enable him to purchase the raw materials required for execution of the said orders. During the year under consideration the assessee found that Shri Bhatt was not delivering batwas of proper quality and to the extent required by the assessee firm and as such stopped making further advances and insisted on Shri Bhatt fulfilling his commitments to the extent of the monies due from him as at the end of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Shri Bhatt broadly confirmed what had been mentioned by the assessee and it was clear from his statement that he is a small man without financial resources and that he had refused to return the monies due from him because the rejected goods were not given back. In view of this state of record the AAC held that the real nature of the claim was not bad debt but was a loss incidental to the assessee's business and arising out of that business. Accordingly, the AAC held that the claim for deduction of Rs.26,866 had to be legitimately allowed to the assessee as a loss incidental to the assessee business and it is against this order that the Revenue has come up in appeal before us. 4. We have heard the rival submissions of both the sides an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t he was a small man without financial sources and as such it would not have served any good purpose by filing a suit against him and thereby wasting the money and time. Under these circumstances, the AAC was fully justified in allowing it as a loss incidental to the assessee's business and arising out of such business as the assessee was required to make advances to Shri Bhatt for getting batwas prepared for him and as such we confirm the order of the AAC on this count. 5. The second ground pertains to the AAC holding that the assessee was entitled to weighted deduction under s. 35B on the commission paid in India to Shri D.C. Joshi and consequently granting relief to the tune of Rs. 31,444 under s. 35B of the Act. 6. As the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Special Bench in ITA No. 3255 of 1976-77 dt. 25th May, 1976 in the case of J.K. Hemchand Co. In which it has been held that any expenditure incurred in India in connection with exports is entitled to weighted deduction and as such the ITO was wrong in rejecting the claim of the assessee on the sole ground that said expenditure had been incurred in India. Similarly, the assessee was entitled to weighted deduction on the amount paid to Shri D.C. Joshi as the assessee had entered into an agreement with Shri Joshi to pay him commission at certain percentage of the turnover as it was Shri Joshi who had specialized in rayon textiles. It was also stated that Shri Joshi had helped the assessee developing the export market and also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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