TMI Blog1998 (4) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... i. The Income-tax Officer rejected such a claim made by the assessee for the assessment year in question holding that it will not fall under any of the sub-clauses (i) to (ix) of clause (b) of sub-section (1) of section 35B of the Income-tax Act. The Commissioner of Income-tax (Appeals) ("the CIT") was of the view that the expenditure incurred by the assessee on its goodwill chartering business may fall under any one of the nine sub-clauses of clause (b) of sub-section (1) of section 35B. On further appeal, the Tribunal also held the view that such expenditure may fall under anyone of the four sub-clauses, namely (i), (ii), (vi) and (vii) of clause (b) of sub-section (1) of section 35B of the Income-tax Act and directed the Income-tax Officer to verify under which of those four sub-clauses, the expenditure incurred by the assessee would fall and give the necessary relief. The assessee also claimed, in the course of assessment proceedings, disallowance of interest claimed under section 40A(8) of the Income-tax Act on net interest. The Income-tax Officer rejected such a claim and he held that if at all any disallowance is to be made under section 40A(8), it should be on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices or facilities which the assessee deals in or provides in the course of his business; (ii) obtaining information regarding markets outside India for such goods, services or facilities; (iii) distribution, supply or provision outside India of such goods, services or facilities, not being expenditure incurred in India in connection therewith or expenditure (wherever incurred) on the carriage of such goods to their destination outside India or on the insurance of such goods while in transit ; (iv) maintenance outside India of a branch, office or agency for the promotion of the sale outside India of such goods, services or facilities ; (v) preparation and submission of tenders for the supply or provision outside India of such goods, services or facilities, and activities incidental thereto ; (vi) furnishing to a person outside India samples or technical information for the promotion of the sale of 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i and that sort of an expenditure was sought to be claimed as a weighted deduction under section 35B of the Income-tax Act. This sort of an expenditure as alleged to have been incurred by the assessee-company, can, by no stretch of imagination, be stated to fall under any one of the sub-clauses of clause (b) of sub-section (1) of section 35(B) of the Income-tax Act, if a cursory glance or glimpse or look at the aforesaid various sub-clauses or clauses (a) to (e) of rule 6AA of the Income-tax Rules, 1962, is made. To put it aptly and pithily, we may say, the nature and character of the expenditure incurred by the assessee is such, as is not falling under any one of the nine sub-clauses of clause (b) of sub-section (1) of section 35B or any of the clauses (a) to (e) of rule 6AA of the Income-tax Rules. At this juncture, we may profitably refer to what the Supreme Court said in two recent decisions, as relatable to the claim for weighted deduction under section 35B of the Income-tax Act. In CIT v. Stepwell Industries Ltd. [1997] 228 ITR 171 (SC), their Lordships said that when a claim for weighted deduction is made, it is for the assessee to satisfy the Income-tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Income-tax Rules. We may also state, by way of reiteration, for the sake of emphasis, that the character of the expenditure incurred by the assessee, as already stated, would indicate, in a crystal clear fashion, that such sort of an expenditure is not at all falling under any one of the nine sub-clauses of clause (b) of sub-section (1) of section 35B of the Income-tax Act or any one of clauses (a) to (e) of rule 6AA of the Income-tax Rules. For the reasons, as above, we are of the view that the Appellate Tribunal was not right in law in holding that the assessee is entitled to weighted deduction under section 35B of the Income-tax Act in respect of the expenditure incurred by it on its goodwill chartering business in the assessment year 1978-79 and we answer this question accordingly. Question No. (2) as framed, we rather feel, is not reflecting the view, as held by the Tribunal. The Tribunal's view is reflected in the following terms : "In our view, it stands to reason, justice and fair play that both the accounts should be considered together and only the net interest payment should be considered for purposes of disallowance under section 40A(8) of the Act. " ..... X X X X Extracts X X X X X X X X Extracts X X X X
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