9911796707
TMI Blog1983 (9) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee before the CIT (A) in the proceedings before him, the services rendered by the STC in this connection are: "1. The State Trading Corporation sends foreign buyers to our tannery and also sends technicians of the foreign country to guide us to improve our quality of finishing. By this the State Trading Corporation makes publicity of our skins to the foreign market and also helps us to improve our quality to the taste of the foreign buyers. 2. The State Trading Corporation is having branches throughout the world. Whenever we have to get any information from outside India, we can get the same from State Trading Corporation situated in the respective countries. Thus, the State Trading Corporation obtains information regarding the market outside India for our goods. 3. The State Trading Corporation by their foreign branches helps us to distribute and supply our goods to the foreign buyers by giving us all information. 4. The State Trading Corporation sends foreign technicians to our factory to inspect the standard of our manufacturing and thus give us suggestions for improvement in the manufacturing. Thus, the State Trading Corporation provides us technical informatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market through STC, the goods dealt in by the assessee had no local market and was being exported only to foreign buyers and as such there is nothing new about the trade in foreign market and consequently no new information was obtained by the assessee's that the expenditure is incurred in India and the payment is not covered by any of the clauses in s. 35B. The point sought to be made by the ld. departmental representative with reference to the order of the ITO is that there is no development of export market as such involved in the assessee's trade because the type of goods dealt in by the assessee were already being exported since past several years. According to him, the provision of s. 35B are intended to develop export market, i.e., to find markets abroad for the goods which were hitherto locally sold in India. However, at the time of hearing of these appeals, he also fairly brought to our attention the instruction of the CBDT dealing with the question of weighted deduction u/s 35B in respect of service charges paid to STC for export of vegetable oil on the representation made to it from the Indian Vegetable Oil Export Association, Bombay on behalf of its associates for clar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me under any of the eligible clauses for allowances of weighted deduction. It is argued that what the STC does is to procure order for the exporter and it is borne out in the preamble to the agreement as follows: "Whereas STC with the object of developing exports of..............(hereinafter called the 'goods') to overseas markets are interested in procuring exports orders from overseas buyers for exports on the terms and conditions as may be mutually agreed with such buyers. And Whereas STC are willing to enlist suppliers for entrusting obligation for manufacture and shipment of the finished leather against a part or whole of the orders(s) that may be obtained by STC for export of finished leather." It is, therefore, argued with reference to the decision of the Madras High Court in Southern Sea foods P. Ltd. (1982) 31 CTR (Mad) 23 : (1983) 40 ITR 855 (Mad) that STC merely procures orders, and payment of commission for procuring orders is not eligible for weighted deduction. The ld. counsel for the assessee, on the hand, contended that the Madras High Court decision will have no bearing on the issue before us in this case because the facts are distinguishable. It was clearly fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, the benefit of the Board's instructions extended to the Vegetable Oil Exporters Association should equally be applied to the assessee's case also as the considerations stated therein for extending the benefit are equally present in the assessee's case. It is further submitted with reference to the contention of the departmental representative that in order to be eligible for the relief u/s 35B the assessee's case must come within the clear terms of the provisions and such relief cannot be extended on a liberal interpretation of the provision, the assessee's case fall within the clear terms of the provisions and the assessee does not seek a liberal interpretation of the provisions of s. 35B. 6. On a consideration of the facts and the contention of the parties, we are satisfied that the assessee is clearly entitled to the deduction u/s 35B in respect of the commission paid to the STC. As already stated, it is common ground that the nature of service rendered by the STC in respect of the export of goods which are necessarily to be canalised or routed through it are identical and the evidence brought on record including the Board's instructions in the case of Vegetable Oil E ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
