TMI Blog2016 (10) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal is, accordingly, answered in the affirmative, that is to say, in favour of the Revenue and against the Assessee. - Income Tax Reference No. 76 of 1998 - - - Dated:- 13-10-2016 - M. S. Sanklecha And S. C. Gupte, JJ. Mr. Murlidhar a/w Mr. Rajesh Poojari i/b Mulla Mulla Craigie Blunt Caroe, for the Applicant Mr. A.R. Malhotra a/w N.A. Kazi for the Respondent JUDGMENT ( Per S.C. Gupte, J.) In this reference under Section 256(1) of the Income Tax Act, 1961 ( Act ), the Income Tax Appellate Tribunal ( Tribunal ) has referred the following question of law for our consideration : Whether on the facts and in the circumstances of the case in law, the Tribunal was justified in holding that the assessee was not entitled to claim weighted deduction under Section 35B of the Act ? 2. The Assessment Year is 1979-80. 3. For the subject assessment year, the assessee claimed weighted deduction on expenditure amounting to ₹ 5,36,77,345/incurred by it on items enumerated in Section 35B of the Act. Section 35B provides for export markets development allowance, allowing weighted deduction in a sum equal to one and onethird times the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction, is not open for us to determine under the statement of case framed by the Tribunal. As held by the Supreme Court in case of Commissioner of Income Tax Vs. Calcutta Agency Ltd. (1950) 18 CCH 0116 ISCC , the jurisdiction of the High Court in the matter of income tax references is an advisory jurisdiction. Under the Act, the decision of the Tribunal on facts is final, unless it can be successfully assailed on the ground that there was no evidence for the conclusion on facts recorded by the Tribunal. It is the duty of the High Court to start by looking at the facts found by the Tribunal and answer the questions of law on that footing. In the present case, the Tribunal in its order has not disputed the nature of services rendered by the assessee as provision of technical knowhow under subsection (2) of Section 80MM of the Act. Infact both the assessee and revenue appear to have proceeded on the footing that the nature of services rendered by the assessee amounts to provision of technical knowhow. The only question, which forms part of the statement of case framed by the Tribunal, is whether or not these services are rendered to a person outside India by the assessee within a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such goods, services or facilities; (vii) travelling outside India for the promotion of the sale outside India of such goods, services or facilities, including travelling outward from, and return to, India; (viii) performance of services outside India in connection with, or incidental to, the execution of any contract for the supply outside India of such goods, services or facilities; (ix) such other activities for the promotion of the sale outside India of such goods, services or facilities as may be prescribed. Explanation [1] : In this section, domestic company shall have the meaning assigned to it in clause (2) of section 80B. Explanation 2 : For the purposes of sub-clause (iii) and sub-clause (viii) of clause (b), expenditure incurred by an assessee engaged in the business of- (i) operation of any ship or other vessel, aircraft or vehicle, or (ii) carriage of, or making arrangements for carriage of, passengers, livestock, mail or goods, on or in relation to such operation or carriage or arrangements for carriage (including in each case expenditure incurred on the provision of any benefit, amenity or facility to the crew, passengers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cilities distributed, supplied, provided, maintained, etc. outside India. There is no reference in clauses (a) or (b) of Subsection (1) of the assessee himself being engaged in the business of exporter of goods or services or incurring the expenditure in connection with such business. Subsection (1A), which is introduced by Finance Act, 1978, with effect from 141978, however, introduces a further condition for claiming deduction under subsection (1)(a). The condition required to be fulfilled under subsection (1A) for claiming deduction under clause (a) of Subsection (1) is that the assessee himself must be engaged in the business of export of goods and is either a smallscale exporter or a holder of an Export House Certificate or in the business of provision of technical knowhow or rendering of services in connection therewith to persons outside India. It also requires further that the expenditure referred to in clause (b) of subsection (1) is incurred by the assessee wholly and exclusively for the purpose of such business of export of goods or technical knowhow, as the case may be. 9. A bare reading of the provision makes it clear that whatever may have been the position earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was not an exporter of any goods or knowhow and was merely a subcontractor of BHEL, who provided these services to BHEL and not to the person outside India, namely, ECSA. As held by the Tribunal in its order dated 18 November 1991, the agreement was entered into between BHEL and the foreign party and it was the duty of former to provide whatever services were contracted to the latter. As to how these services were to be provided to the foreign party was in the exclusive domain of BHEL. It alone was responsible to the foreign party for the provision of these services. In the premises, the Tribunal was right in coming to the conclusion that whatever was provided to the foreign party was clearly by BHEL and not the assessee concerned. The Tribunal rightly concluded that what was done by the assesseecompany, however technically specialized job it may be, it was done only for BHEL as a subcontractor and not for a person outside India and that, accordingly, it did not entitle the assessee to any deduction under Section 35B. 12. Mr. Murlidhar, learned Counsel for the Assesee, relied on the case of Commissioner of Income Tax Vs. Stepwell Industries Ltd. (1997) 228 ITR 171 In th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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