TMI Blog1996 (3) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered in processing and shipping materials, preparation of export documents, negotiation of the same through banks and allied correspondence ? " In the assessment relating to the assessment year 1978-79, the Income-tax Officer had allowed depreciation on the lift in the assessee-company's office building at ten per cent. applicable to the category coming under "General electric machinery" as against the assessee's claim for its classification as "rope-way structures-carriers" entitled to the higher rate of 15 per cent. as per entry III(ii)B(15) of the depreciation Schedule. The Corn missioner of Income-tax (Appeals) upheld the Income-tax Officer's finding. The assessee appealed to the Tribunal. The Tribunal concurred with the Commissioner of Income-tax (Appeals)' finding in the following words : " Ropeway is defined in Chamber's Twentieth Century Dictionary as 'a means of transmission by ropes'. Rope is defined as 'a stout twist of fibre, wire, etc.' The term 'lift' is defined as an enclosed platform moving in a well to carry persons or goods up and down. Though a lift carries passengers or goods, we are of the view that it is a different species from what is contemplated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the depreciation Schedule. Further, inasmuch as the lift is used in the office building for business purposes, the higher depreciation is allowed in the case of lift. Accordingly, we hold that for the lift, the assessee is entitled to 15 per cent. depreciation. In that view of the matter, we answer question No. 1 referred to us in the negative and in favour of the assessee. So far as question No. 2 is concerned, it relates to weighted deduction claimed under section 35B of the Income-tax Act, 1961. The assessee claimed in the assessment year 1978-79 weighted deduction under section 35B(1) in respect of expenditure incurred for attestation and legalisation of export invoices, (ii) in respect of legal expenses incurred in connection with export of flats to Pakistan both amounting to Rs. 570, and (iii) in respect of salary, allowances, contribution to provident fund paid to the members of the staff attributable for services rendered in processing and shipping materials, preparation of export documents, negotiation of the same through banks and allied correspondence amounting to Rs. 28,172. The Income-tax Officer rejected the assessee's claim for weighted deduction in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation of the same through banks and allied correspondence. Therefore, the expenditure incurred did not relate to the activity mentioned under sub-clause (v) inasmuch as the expenditure was not incurred for preparation and submission of tenders. It remains to be seen that a sum of Rs. 28,172 was incurred as expenditure by way of salary, allowance, contribution to provident fund paid to the members of the staff attributable to services rendered in processing and shipping materials, preparation of export documents, negotiation of the same through banks and allied correspondence. Weighted deduction is claimed under sub-clause (v). Sub-clause (v) relates to expenditure incurred for preparation and submission of tenders, According to the facts arising in this case, the assessee purchased tender forms and after processing the same, the foreign contract was obtained for export of the goods to foreign countries. Purchase of tenders and processing of the same were stated to be done by the staff of the export wing. One of the activities done by the staff of the foreign wing is stated to be preparation of export documents. Export commences from offering to accept the tender for the export o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot find a place in sub-clause (v). Therefore, it cannot be said that under section 35B(1)(v) for claiming weighted deduction, the expenditure ought not to have been incurred in India. It is only under sub-clause (iii) alone the expenditure claimed cannot be allowed unless it is incurred in a foreign country. In the case of CIT v. Aspinwall and Co. Ltd. [1993] 204 ITR 225, the Kerala High Court while considering section 35B of the Act along with the Central Board of Direct Taxes Circular F. No. 268/738/Sl. I.T.J. dated December 28, 1981, held that the amounts came under sub-clauses (ii), (v) and (vi) of section 35B(1)(b) for weighted deduction and the fact that expenditure was incurred in India was of no consequence. The Gujarat High Court in Testeels Ltd. v. CIT [1994] 205 ITR 230 held that salary paid to employees working in the foreign wing is entitled to weighted deduction under section 35B(1)(b) of the Act. In the case of Associated Stone Industries Ltd. v. CIT [1994] 210 ITR 821 (Raj), a question arose whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that weighted deduction under section 35B of the Income-tax Act was not allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had been held entitled to weighted deduction under section 35B of the Act in respect of expenses on salary and expenses on staff engaged in the export sale (CIT v. Bakul Cashew Co. [1992] 197 ITR 135 (Ker)), irrespective of the fact whether the same was incurred in India or outside India. Thus, we have seen various High Courts including this court have allowed salary paid to employees working in the export wing who were allowed weighted deduction under section 35B(1) of the Act proportionately relatable to the export trade. In the present case, the assessee claimed weighted deduction under section 35B(1)(b)(v) of the Act on the expenditure incurred amounting to Rs. 28,172 by way of salary, allowances, contributions to provident fund paid to the members of the staff attributable to services rendered in respect of foreign trade. Here also the assessee is doing business in both local sale as well as in export sale. So, therefore, the weighted deduction claimed under section 35B(1) of the Act is allowable proportionately relatable to foreign trade on the expenditure claimed at Rs. 28,172. Considering the various decisions cited supra, we hold that the assessee is entitled to we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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