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TMI Blog1982 (7) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... d deduction under s. 35B. . Rs. Freight expenses on the export of Horlicks to foreign markets 7,75,541 Octroi duty paid on bulk powder for export to foreign markets 82,171 Insurance charges on the export of Horlicks to foreign markets 70,376 Loading-unloading charges 289 Conveyance expenses 28 9,28,415 The expenditure incurred by an exporter on freight and insurance on the goods exported will not be entitled to deduction under s. 35B. A plain reading of sub-cl.(iii) of sub-s. (i) of s. 35B where it has been stated that expenditure wherever incurred on freight and insurance will not be entitled to any deduction, make abundantly clear that the assessee is not entitled to deduction under s. 35B. It has been argued by the assessee that the expenses are allowable under cl. (viii) of 35B (I)(b). When specifically the weighted deduction is not allowable on freight and insurance under cl. (iii), the claim cannot be entertained under cl. (viii) of s. 35B (1)(b) of the Act." In respect of generators and motors at Nabha and Bangalore units, the assessee had claimed triple shift and do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Revenue and he drew our attention to pages 1 and 2 of the paper book in which the assessee's claim of weighted deduction under s. 35B are detailed out and submitted that it was after perusal of these details of export development expenditure that the ITO allowed the assessee's claim under s. 35B and while doing so he relied on large number of Tribunal's decisions on this issue, with copies of which he came forward before the CIT under s. 263 proceedings and he placed the same before us on the assessee's compilation with his reply to the CIT's notice enclosed with the said Tribunal decisions. He came forward with a noval argument that if at all any prejudice is caused to the Revenue, it is not because of the ITO's order but because of the order of the IAC as the ITO in the instant case passed his order after getting necessary instruction or approval of the IAC under s. 144B and, according to him, the order of the IAC could not be revised under s. 263 by the CIT. He submitted that in the light of the Calcutta High Court decision in the case of Russell Properties Pvt. Ltd. vs. Addl. CIT (1977) 109 ITR 229 (Cal) the assessment order framed by the ITO did not call for any interfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecial Bench decision dt. 17th June, 1978 in the case of J. Hem Chand Co., it was available when the assessment was framed. The assessee's claim in respect of all these items which are directed to be disallowed by the CIT should have been disallowed by the ITO in the course of assessment proceedings itself. In respect of extra allowance, she placed her reliance on the order of the CIT. 6. After taking into consideration the rival submissions, we are of the view that the CIT had jurisdiction in the instant case under s. 263 of the Act because it will be apparent from the relevant extract from the assessment order which we have placed above pertaining to the assessee's claim under s. 35B that the ITO does not mention a word about the assessee's claim of weighted deduction in respect of items which are directed to be disallowed by the CIT. There is not a word mentioned in the said assessment order on the issue as to why the ITO allowed the assessee's claim of weighted deduction and on which Tribunal's decision he placed his reliance. Even from the paper book filed before us, the entire expenditure with which are enclosed large number of Tribunal decisions came to be filed before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n constitution of the Special Bench to iron out the divergence of opinion on the issue, the Special Bench in the case of J. Hem Chand Co. has almost laid the issue at rest and the said decision has been accepted by the Revenue and, according to the said decision, the assessee had no case in respect of its claim for the following items: . Rs. (i) Charges paid for the inspection and supervision of export goods 23,315 (ii) Bank charges paid for the export 6,173 (iii) Cost of excise revenue stamps and Hundi papers for export documentation 330 (iv) Misc. expenses incurred in connection with export 7,837 However, in respect of the cost of stationery used in connection with export which amounted to Rs. 881, the assessee's claim ought to have been disallowed by the CIT only in respect of 50 per cent of the same, i.e., for Rs. 440.50 and not for the whole sum. The order of the CIT is, therefore, modified and the ITO will withdraw weighted deduction accordingly. 8. Coming to extra shift allowance, as we have already said above, in respect of Nabha and Bangalore units, triple shift and double shift allowance r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Electrical machinery switch gear and instrument transformers and other stationary plant and wiring and fittings of electric light and fan installation. (2) It is common ground that the generator has been allowed general rate of depreciation at 10 per cent and that the letters 'NESA' are not inscribed specifically against item III(i) under which 10 per cent has been allowed. The AAC accepted the assessee's contention that the generator related to motors attached to the spinning unit and that it should, therefore, be considered as part of textile machinery. He also added, 'generator is operated by diesel for producing electricity and it is not run on electricity. Hence it cannot be called an electrical machinery.' The learned DR claimed that the reasoning adopted by the AAC is erroneous. According to him, the fact that the source of power was diesel, does not make the machinery any-the-less electrical. Generator being an independent machinery, it cannot be considered as textile machinery. It is intrinsically electrical. He also claimed that generator fits the description 'stationary plant'. The learned representative for the assessee relied upon the order of the AAC. 3. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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