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Issues:
Interpretation of section 35B of the Income-tax Act, 1961 regarding weighted deduction on specific expenses incurred by the assessee for export sales during the assessment year 1978-79. Analysis: The judgment addresses a reference made by the Income-tax Appellate Tribunal regarding the disallowance of weighted deduction under section 35B of the Income-tax Act, 1961 on certain expenses incurred by the assessee for export sales. The assessee, a company manufacturing AAC and ACSR conductors, claimed weighted deduction on insurance charges, freight from factory to port, and ocean freight. The Tribunal rejected the claim, leading to the present reference. The assessee, during the hearing, confined the claim to insurance charges on export sales and ocean freight only, giving up the claim for other expenses. The key contention revolved around the interpretation of sub-clauses (iii) and (viii) of section 35B, with the assessee arguing that expenditure on insurance and carriage of goods should be covered under sub-clause (viii) as a residuary entry even if excluded from sub-clause (iii. The court analyzed the two sub-clauses of section 35B in detail, emphasizing that if a specific expenditure is excluded from sub-clause (iii), it cannot be covered under a general provision like sub-clause (viii). The judgment highlighted a conflict between the High Courts of Punjab and Haryana and Bombay on this issue. The Punjab and Haryana High Court took a liberal interpretation approach to promote exports, allowing weighted deduction, while the Bombay High Court emphasized a strict interpretation based on statutory provisions. The court ultimately agreed with the Bombay High Court's view, stating that if a specific provision excludes certain expenditure, it cannot be allowed under a general provision. The judgment rejected the assessee's claim for weighted deduction on insurance charges and ocean freight, ruling in favor of the Revenue. In conclusion, the court answered the question in favor of the Revenue, emphasizing the need to interpret statutory provisions consistently and in line with the specific exclusions mentioned in the law. The judgment highlighted the importance of adhering to well-established principles of statutory interpretation and rejected the liberal approach adopted by some High Courts in granting weighted deductions for specific expenditures related to export sales.
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