TMI Blog1998 (12) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year 1981-82': "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the sum of Rs. 19,021 representing commission paid to foreign agents under section 35B(l)(b)(i) without giving any specific interpretation of various clauses contained in section 35B(l)(b)(ii) of Income-tax Act ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the addition of Rs. 90,254 made on account of ex gratia payment under section 36(l)(ii) without discussing the provisions of that section ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in deleting the addition of Rs. 25,000 made on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal. On a concession made by counsel for the assessee, the Tribunal withdrew the relief of deduction granted by the Commissioner on expenditures amounting to Rs. 50,555. Deduction claimed by the assessee, in respect of the commission amounting to Rs. 19,021 paid to foreign agency for arranging export, was allowed by the Tribunal. It is this order of the Tribunal allowing deduction of Rs. 19,021 under section 35B which is under reference. On a perusal of the order of the Tribunal, it is not clear as to which of the sub-clauses of clause (b) of sub-section (1) of section 35B were attracted so as to allow deduction of the commission paid to the foreign agents. It was necessary to examine as to which sub-clause was attracted. The Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of commission to foreign agents would fall under any of the sub-clauses of clause (b) of section 35B(1) of the Act. The question is, therefore, remitted to the Tribunal for verifying the facts and to ascertain the activities in respect of which the expenditure was incurred by the assessee. It shall be kept in view that certain sub-clauses were omitted by the Finance (No. 2) Act, 1980, with effect from April 1, 1981. If the expenditure has not been incurred on any of the activities specified in the sub-clauses of clause (b) of section 35B(1) of the Act, it would not qualify for deduction. Questions Nos. 2 and 3 : Question No. 2 relates to the ex gratia payment and question No. 3 is regarding a payment towards the building fund of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee during the year. It was claimed that those units satisfied the conditions laid down in section 80J. Copies of the profit and loss account and balance-sheets of all the three separate units were filed. The Assessing Officer, however, took the view that the addition of a new Glost Kiln did not constitute a separate industrial undertaking but was merely an addition to the existing unit. The Assessing Officer also held that no separate books of account had been maintained for any of the kilns and separate books of account of the units were prepared by the assessee after estimating the sales and expenses in the case of each unit. The basis of such estimates was not explained by the assessee. The Assessing Officer further noticed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amined by the Supreme Court under section 15C of the Indian Income-tax Act, 1922. In that case, the assessee had established one more centre at Muri and also had made extension to the existing centres at Belur and Alupuram. It was held that the benefit of section 15C was rightly allowed to the assessee. In Lohia Machines Ltd. v. Union of India [1985] 152 ITR 308 (SC), the question before the Supreme Court related to the interpretation of the expression "capital employed". The controversy raised in the question, in the case in hand, does give rise to a question of law. In the cases referred to above and, decided by the Supreme Court, the controversies were different. On a consideration of the controversy in the case of the assessee here, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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