9911796707
TMI Blog1985 (2) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in various lots and then exports them. It had set up its own manufacturing unit at Kallur in Kerala State. The total quantity of diamonds manufactured by this small-scale industrial undertaking owned by the assessee was 314.42 carats out of a total export of 30,412 carats. The assessee claimed weighted deduction on the plea that it was a small-scale exporter within the meaning of section 35B(1A)(a)(i). The ITO held that the assessee had exported only 10 per cent of the diamonds manufactured by itself and was, therefore, not entitled to weighted deduction. The Commissioner (Appeals) came to the conclusion that the assessee satisfied all the conditions and was entitled to weighted deduction. 3. It is a fact that the assessee owned a smal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for the assessee was that these words were unnecessary if the assessee was not entitled to weighted deduction on the entire export. Reliance was placed on the Supreme Court's decision in Cloth Traders (P.) Ltd. v. Addl. CIT [1979] 118 ITR 243 at pages 254-255 for the proposition that there was difference between the qualifying conditions and the quality of income. 6. We do not propose to refer to this ruling since, in our opinion, it is totally of no assistance in resolving the point at issue before us. 7. The further contention of the learned counsel for the assessee was that the expenses which qualified for weighted deduction under section 35B(1A)(b)(i) would be as exporter of goods and not as a small-scale exporter. Therefore, he ur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -scale exporter' means a person who exports goods manufactured or produced in any small-scale industrial undertaking or undertakings owned by him : Provided that such person does not own any industrial undertaking which is not a small-scale industrial undertaking ; (b) 'Export House Certificate' means a valid Export House Certificate issued by the Chief Controller of Imports and Exports, Government of India ; (c) 'provision of technical know-how' has the meaning assigned to it in sub-section (2) of section 80MM ; (d) 'small-scale industrial undertaking' has the meaning assigned to it in clause (2) of the Explanation below sub-section (2) of section 32A." 9. It has to be remembered that in the two years when sub-section (1A) was on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the assessee exported this year was 314.42 carats out of the total exports of 30,412.85 carats. The export as a small-scale exporter was, thus, only 9.68 per cent of the total export. 12. The question arises, would the assessee be entitled to claim weighted deduction on expenses incurred on the entire export when the qualifying export as a small-scale exporter is only 9.68 per cent of the total ? In our opinion, the answer is in the negative, particularly in view of the provisions of sub-section 1A(b) which lays down that "the expenditure incurred after 31-3-1978 is incurred by the assessee wholly and exclusively for the purposes of the business referred to in sub-clause (i) or, as the case may be, sub-clause (ii) of clause (a)". Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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