1989 (9) TMI 22

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..... are covered by sub-clauses (ii) and (vii), instead of clauses (iii) and (viii) of section 35B(1)(b) and hence holding that Explanation 2 inserted by the Finance Act, 1973, with retrospective effect from April 1, 1968, is not applicable in this case ?" The assessee, a firm, carries on business as freight-brokers and shipping agents. The proceedings relate to the assessment years 1970-71 and 1971-72. During the relevant previous years, the assessee undertook to charter foreign ships for the import of foodgrains, etc., for the Government of India and received commission from the concerned shipping companies. In respect of the services rendered and facilities granted by it in the sphere of its activities, the assessee incurred certain expendi .....

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..... 35B(1) inserted by the Finance Act, 1973, with retrospective effect from April 1, 1968, the claim was not admissible in respect of expenditure falling under the sub-clauses (iii) and (viii) of section 35B(1)(b) and that expenditure was falling under these sub-clauses only, and (iii) that the assessee would be entitled to proportionate relief only, if at all, "with reference to the amounts received in rupees and the foreign exchange earned in foreign currency". The Tribunal rejected all the three contentions and dismissed the Department's appeal. Dr. Balasubramanian, learned counsel for the Department, reiterated that the assessee was not an exporter of goods, services and/or facilities. Its business was only that of a broker. It was collec .....

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..... 5B(1)(b), expenditure falling under clauses (iii) and (viii) will not qualify for deduction under section 35B(1)(b). In this background, we have carefully read clause (a) of sub-section (1) of section 35B. We do not find anything in the clause which debars a broker or agent who supplies services or facilities as distinct from goods from getting deduction under section 35B. In fact, by its judgment dated June 13, 1978, in Income-tax Reference No. 375 of 1977, in CIT v. Indian Hotels Co. Ltd., this court has held that the assessee whose business was merely to extend facilities and render services, was entitled to deduction under section 35B. The next question is, whether the expenditure incurred by the assessee falls under one of these nine .....

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