Gujarat High Court
Wintex Mills Ltd. vs Commissioner Of Income-Tax on 5 December, 1991
JUDGMENT J.N. Bhatt, J.
1. The Income-tax Appellate Tribunal ("the Tribunal", for short) has referred to us for our opinion the following question under section 256(1) of the Income-tax Act, 1961 ("the Act", for short) :
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the disallowance of weighted deduction under section 35B of the Act, of a sum of Rs. 2,08,438 comprising of (i) freight, cartage and shipping charge - Rs. 1,59,375, (ii) insurance - Rs. 20,418, (iii) packing charges - Rs. 13,841, (iv) carting - Rs. 5,516, (v) freight - Rs. 9,887, (vi) insurance - Rs. 93, (vii) membership fee - Rs. 183 and (viii) bank commission - Rs. 1,125 ?"
2. The assessee is a company carrying on business in the manufacture and sale of art silk cloth. The relevant assessment year is 1978-79. For the said assessment year, the assessee claimed weighted deduction under section 35B of the Act in respect of a total sum of Rs. 2,08,438. Out of the above sum, both the Income-tax Officer as also the Commissioner of Income-tax (Appeals) ("the Commissioner", for short), declined to give reliefs under section 35B of the Act in respect of the following items of expenditure claimed by the assessee :
Rs.
1. Freight carting and shipping charges 1,59,375
2. Insurance 20,418
3. Packing charges 13,841
4. Carting 3,516
5. Freight 9,887 6. Insurance 93 7. Membership fees 183
8. Bank commission 1,125
3. The assessee carried the matter further to the Tribunal. It was pointed out before the Tribunal by the Revenue that the said issue was covered by the decision of the Special Bench in the case of J. Hemchand and Co. (I.A. Nos. 3255 and 3330/ (Bom) of 1976-77, dated June 17, 1978). Relaying on the said decision, the Tribunal upheld the decision of the authorities below.
4. In so far as items Nos. 1, 2, 3, 4, 5 and 6 are concerned, they fall within sub-clause (iii) of clause (b) of sub-section (1) of section 35B of the Act. It is apparent from the above sub-clause (iii) that the aforesaid items of expenditure are not allowable by way of export markets development allowance. We may also mention that, in so far as those items of expenditure are concerned, they are covered by the decision of this court delivered today, i.e., December 5, 1991, in the case of Isabgul Export Corporation v. CIT [1993] 200 ITR 797, in Income-tax Reference No. 95 of 1982.
5. In so far as expenditure relating to item No. 7, i.e., membership fees, is concerned, we may mention that it does not fall in any of the sub-clauses of section 35B(1)(b) of the Act. As regards item No. 8 as aforesaid, relating to bank commission, we may say that it is also not allowable for weighted deduction and it is also covered by our decision rendered today in Income-tax Reference No. 94 of 1982 (Isabgul Export Corporation v. CIT [1994] 205 ITR 227 (Guj)).
6. In the above facts and circumstances, we are of the clear opinion that the Tribunal was justified in disallowing the claims made by the assessee on the aforesaid items of expenditure.
6. In the result, the reference is required to be answered in favour of the Revenue and against the assessee. The reference is answered, accordingly, with no order as to costs.