9911796707
TMI Blog1978 (6) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,51,785.97. In the assessment proceedings it claimed before the ITO, for the purpose of weighted deduction under section 35B, expenses on account of commission, postage and telegrams, local travelling expenses, sample charges, label charges, salary and bonus paid to the employees in India, sales promotion expenses and Export Credit Guarantee Corporation insurance. It is seen from the assessment order that besides claiming these expenses specifically, the assessees, by a special note, claimed beneficial treatment under the section also for all the other general expenses. The ITO was of the opinion that barring commission paid to foreigners none of the other expenses claimed could be classified as expenses for the purpose of export markets d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found the claim relating to travelling expenses also unacceptable. It was further observed by the AAC that those expenses were not shown to have been incurred for the purpose of obtaining information regarding export markets or for the purpose of advertisement or publicity of the exported goods. The expenditure on labels affixed on the exported goods was also taken by the AAC as incurred in India in connection with the distribution, supply of provision of provision of goods outside the country to fall within the same exclusion. Regarding the Export Credit Guarantee Corporation insurance, the AAC taking it to be expenditure incurred on the insurance of goods while in transit held that too will fall within the exclusion in sub-clause (iii) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is mandatory that it must fall in one or the other of the sub-clauses of section 35B(1)(b). We do not know on what basis the AAC classified and took the entire expenditure incurred by the assessee in India as postage and telegrams on distribution and supply of goods outside India to fall within the exclusion or sub-clause (iii). The matter, in our view, requires further examination and if it is seen that any part of it can be considered as expenditure on activities specified in any one or more of the other sub-clauses, then irrespective of the fact that such part of expenditure is incurred within the country, the same would be entitled to weighted deduction. 6. There is no dispute about the fact that the travelling expenses for which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on are taken by the assessee to obtain pertinent information about the creditworthiness of particular foreign buyers, their reputation and the outer limit up to which goods could be supplied to them before actually receiving the price thereof. It is for such services that the payment is made. This is an expenditure incurred on obtaining information regarding the foreign market. By 'information regarding a market' is to be understood not only about the demand and supply position and the rate prevalent there but also about the buyers available there, their trustworthiness, business connections, solvency, capacity, etc. That being so, in our opinion, the assessee's claim on this must be upheld as failing within sub-clause (ii) of section 35B(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an expenditure entitled to weighted allowance. 11. The same is to be said about the sale promotion expenses. This is an amount spent in receiving and treating foreign buyers. They are taken to the assessee's business place for showing them the exportable goods and to furnish to them all the details and information relevant for finalising sales. From them it is seen that the assessee gets information about the foreign markets. We have held in the similar case heard along with these appeals that the nature of the expenditure being such, it would clearly fall within sub-clauses (i), (ii) and (vi). We confirm the AAC's decision on this too. 12. With regard to the other item, salary and bonus, we have the annexed order outlining the princ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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