TMI Blog2014 (11) TMI 602X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 entitle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... society and assessed in the status of AOP. The assessment year under reference is 1980-1981 and the relevant previous year is F.Y. Ended on 31.03.1980. The assessee is carrying on business of dairy at Ahmedabad Kanjari Plant and Plant at Mogar. Activities are purchasing of milk from primary societies and processing the same and sale thereof as butter, ghee, and whole milk powder, cattle food known as 'Amul Dan'. There is also Bal Amul Plant and Choclate Plant. For the assessment year 1980-1981 the assessee had claimed weighted deduction u/s. 35C (Agricultural Development Allowance) in respect of the following items :- Salary Rs.20,29,058.00 Veterinary medicines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the services or facilities obtained only incidental benefit. The provisions of section 35C did not permit bifurcating the qualifying expenditure. The entire qualifying expenditure was eligible for weighted deduction. Under section 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 underlying idea is that the assessee should incur expenditure for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tent that the recipient can himself undertake such activity. It is not possible to read section 35C(1)(b)(ii) to the effect that the activities specified therein have to be restricted only to the limited purpose of educating the agriculturist, grower or producer, and if over and above the process of educating such recipient some more services or facilities were rendered the assessee should be denied the benefit. The Court held that :- We, therefore, hold that the Appellate Tribunal was not right in its interpretation and application of section 35C of the Act. The first question referred to us is therefore answered in the negative, i.e. in favour of the assessee and against the Revenue. In so far as the second question ..... X X X X Extracts X X X X X X X X Extracts X X X X
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