Isabgul Export Corporation v. Commissioner Of Income-Tax

R.C Mankad, A.C.J:— The assessment year under reference is 1977–78, the previous year being Samvat year 2032. The assessee, a registered partnership firm, claimed weighted deduction under section 35B of the Income-tax Act, 1961 (“the Act” for short), in respect of the following items of expenditure in the course of its assessment:

(Rs.) (i) Transport charges 24,232 (ii) Insurance 12,827 (iii) Shipping and forwarding charges 39,638

2. The assessee's claim was rejected by the Income-tax Officer.

3. The view taken by the Income-tax Officer was confirmed by the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal (“the Tribunal” for short).

4. The assessee being aggrieved by the order of the Tribunal, the following question has been referred to us for our opinion, at its instance, under section 256(1) of the Act:

“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in rejecting the claim of the assessee for weighted deduction under section 35B of the Act on (i) Transport charges Rs. 24,232, (ii) Insurance Rs. 12,827, and (iii) Shipping and forwarding charges Rs. 39,638?”

5. The expenditure which the assessee has incurred would fall under sub-clause (iii) of section 35B(1)(b) since this expenditure is in connection with distribution or supply of the goods exported. The said provision, however, makes it clear that expenditure incurred in India or the expendi-ture incurred on the carriage of the goods exported to their destination outside India or on the insurance of such goods while in transit would not qualify for weighted deduction. In view of this clear position, the assessee's claim cannot be sustained. In our opinion, the Tribunal and the taxing authoritie's were right in rejecting the assessee's claim.

6. In the result, the question, which has been referred to us for our opinion is answered in the affirmative and against the assessee. Refer-ence answered accordingly with no order as to costs.