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2014 (11) TMI 602 - HC - Income TaxInterpretation of application of section 35C – entire expenses eligible for weighted deduction or not - Held that:- The Tribunal rightly was of the view that Kaira Dist. Co-Op. Milk Producers Union Ltd. Versus Commissioner Of Income Tax [2001 (7) TMI 71 - GUJARAT High Court] – u/s 35C(1)(a) the nexus between the supplier of raw material to the assessee and the providing of services by the assessee has been stipulated - Though the nexus may not be direct yet the requirement is to the effect that the assessee, to qualify for weighted deduction under that section, shall incur expenditure of the specified nature to provide the goods, services or facilities to a person who would in turn be the supplier of raw material - the assessee should incur expenditure for the purpose of obtaining raw material, while at the same time incur such expenditure in a manner so as to undertake development of the recipient and the area in which the recipient is located, i.e. rural area - merely because the assessee undertakes certain activities which may not directly disseminate information or demonstrate modern techniques or methods of agriculture, animal husbandry or poultry farming it cannot be said that expenditure, which is otherwise eligible for weighted deduction, does not fall within the nature of expenditure described in clause (a) of section 35C(1) - The assessee is entitled to deduction of expenditure claimed in entirety except the aforesaid two items which have been dealt with the by the Income-tax Officer – decided in favour of assessee.
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