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TMI Blog1986 (2) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... uota fees of Rs. 1,89,638. The assessee carried the matter in appeal before the CIT (A) unsuccessfully. 3. The grounds of appeal before us may be stated briefly as follows: "The ld. CIT (A) and the ITO failed to appreciate that the appellant had paid commission to local parties for obtaining information regarding market outside India for export of appellant good which clearly falls under sub-cl. (ii) of s. 35B(1)(b) of the Act. Further, in order to qualify for weighted deduction under s. 35B(1) (b) of the Act, an expenditure need not be incurred outside India except that falling under sub-cl. (iii) of the said section. The ITO erred in not allowing weighted deduction in respect of Exhibition expenses of Rs. 1,07,626. The CIT (A) as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 296 : (1978) 114 ITR 485 (Bom) and in the case of Universal Ferro and Allied Chemicals Ltd. Anr. vs. P.G.K. Warrier Ors. (1983) 37 CTR (Bom) 208 : (1983) 143 ITR 959 (Bom). Shri Tej Prakash for the Department supported the orders of the authorities below. In particular, he relied on the decision of the Madras High Court in the case of CIT vs. Southern Sea Foods P. Ltd. (1982) 31 CTR (Mad) 23 : (1983) 140 ITR 855 (Mad), and contended that considering the services rendered by the parties to whom commission was paid, the same was rightly disallowed, for purposes of weighted deduction. As for the exhibition expenses, it was his plea that the exhibition was held only in India and the same could not fall under sub-cl. (i) of s. 35B(1)(b) or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain to the purposes mentioned in the various sub-sections of s. 35B, which purposes are indicated as pertaining to various activities outside India. The expenditure claimed by the assessee have to be examined in the light of the principles laid down by the Tribunal in the case of J. Hemchand Co. and also the Bombay High Court decision cited supra. The dispute is about the commission paid to local parties. The ITO has remarked as follows: "The commission paid to local parties amounts to Rs. 8,59,800. The amounts are paid to the local parties for booking orders from abroad. The Madras High Court has held in the case of Southern Sea Foods (P) Ltd. (1983) 140 ITR 855 (Mad) that payment of commission in India for procuring orders from for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o of the Bombay High Court decision in Universal Ferro and Allied Chemicals, cited supra, and also the decision of the Special Bench of the Tribunal in the case of J. Hemchand Co., we uphold the contention of the assessee and set aside the order of the Commissioner (Appeals). 6. The second point of dispute is about the rejection of the assessee's claim for weighted deduction in respect of exhibition expenses of Rs. 1,07,626. The ITO rejected the assessee's claim as the expenditure was incurred for participation in the fair and not by way of any arrangement to specifically export the assessee's goods. The assessee's contention is that Textile Export Promotion Council. For the first time in their history, had arranged the Silver Tex Fair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (sic). The exhibition expenses do not fall in sub-cl. (iii) (sic). Foreigners attended the exhibition and went with the knowledge of their products. In other words, their products gained publicity with foreigners. Having regard to the rival submissions and material on record, we uphold the contention of the assessee that the exhibition though held in India resulted in publicity outside India and set aside the order of the commissioner (A) on this point. 7. As regards the quota fees paid to Cotton Textile Export Promotion Council, we notice that the TEXPROCIL grants quota to the members. Service charge is payable to the Council and also the quota fees. A note has been provided in the paper book at page 3 as regards the quota fees and serv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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