TMI Blog1984 (12) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... utation filed with the return, it claimed depreciation and development rebate at Rs. 1,88,448. Thereafter, it further claimed a sum of Rs. 1,57,653 as weighted deduction under section 35B of the Income-tax Act. The assessee's stand was that a sum of Rs. 4,72,960 incurred by it as expenses were eligible for this deduction. The break-up of this amount is as under : Rs. (1) Interest paid to the Bank of Maharashtra on export packing credit account 3,65,875 (2) Commission and brokerage for export 81,500 (3) Postage, telephone and telegram expenses 8,460 (4) Bank commission on export packing credit account 17,125 ------------------- Total 4,72,960 ------------------- After complying with the necessary formalities which included proceedings under section 144B of the Income-tax Act, the Income-tax Officer allowed the weighted deduction at Rs. 1,57,653 purporting to be 1/3rd of Rs. 4,72,960 (though it was not exactly equal to 1/3rd). The assessee moved an application under section 154 for rectification. The Inspecting Assistant Commissioner (Assessment), however, stayed the proceedings as the matter had been taken up by the Commissioner of Income-tax under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort contract entered into with the foreign party. It was further stated that this account was quite different from the normal cash credit account and it was only for this reason that there was a preferential rate of interest, i.e., for this account, the rate of interest was 11% per annum, whereas (normal) interest was 17% per annum. The certificate further goes to show that the loan given in this export packing credit loan account was at the rate of 100% of cost of raw material, unlike 65% in the case of normal hypothecation/cash credit account. These accounts are stated in the certificate furnished by the bank. They were neither challenged by the learned Income-tax Officer nor by the learned Commissioner of Income-tax. The correctness of the said certificate was not disputed by the Commissioner of Income-tax. So, according to the Tribunal, the facts stated in the certificate will have to be taken as correct. The Tribunal, therefore, further stated that, on these facts, the question is as to whether for claiming weighted deduction under the said provision, the assessee is required to show that it incurred expenditure of Rs. 3,65,875 in the export packing credit account to the Mahar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this court in CIT v. K. N. Oil Industries [1982] 134 ITR 651, wherein the words occurring in sub-clause (iii) of section 35B(1)(b) have been considered. Learned counsel appearing for the assessee, on the other hand, contended that the findings of fact arrived at by the Tribunal on the basis of the certificate of the bank which was not challenged at any stage of the proceedings are that all this cash credit under this account, i.e., export packing credit account, is utilised for purchasing raw material for supply of the finished goods on the basis of contracts with foreign parties. He, therefore, contended that so far as this fact is concerned, it is not disputed and, on these facts, it could not be said that the assessee was not entitled to weighted deduction. Learned counsel contended that the judgment on which reliance is placed is of no assistance as in that case the language of sub-clause (iii) of section 35B(1)(b) was considered whereas in the present case, we are concerned with the language of section 35B(1)(b)(viii). Section 35B reads : " 35B. (1) (a) Where an assessee, being a domestic company or person (other than a company) who is resident in India, has incurred a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 or livestock) shall not be regarded as expenditure incurred by the assessee on the supply outside India of services or facilities. (2) Where a deduction under this section is claimed and allowed for any assessment year in respect of any expenditure referred to in subsection (1), deduction shall not be allowed in respect of such expenditure under any other provision of this Act for the same or any other assessment year." This section provides a deduction of a sum equal to 1/3rd of the amount of such expenditure incurred during the previous year, and subclause (viii) of sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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