TMI Blog2009 (1) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... harges are not entitled to weighted deduction - printing and stationery and rent for teleprinter and direct telephone lines, is merely normal business expenditure - that fees paid to the Registrar of Companies amounts to a capital expenditure - expenditure had been incurred on obtaining market survey for setting up of a new unit of manufacturing, the said expenditure amounted to capital expenditure – assessee not entitled for weighted deduction u/s 35B - 112 of 1990 - - - Dated:- 14-1-2009 - F. I. REBELLO and R. S. MOHITE JJ. P. S. Sahadevan for the Commissioner. R. H. Toprani for the assessee. JUDGMENT The judgment of the court was delivered by R. S. M0HITE J.- By this reference, the following questions of law hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted deduction under section 35B(1)(b). (i) Special packing on goods exported. (ii) Gifts given to foreign parties. (iii) Proportionate printing and stationery and rent for teleprinter and direct telephone lines ?" 5. This question was referred in respect of the assessment years 1976-77, 1977-78, 1978-79 and 1979-80. "5. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in holding that out of fees of Rs. 45,000 paid by the assessee to the Registrar of Companies, a deduction of Rs.16,800 only was allowable ?" 6. This question was raised in respect of the assessment year 1976-77 only. "6. Whether, on the facts and in the circumstances of the case, the Tribunal was right in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to a weighted deduction under section 35B on expenses made on the export markets development though the expenditure was incurred in India. This question was answered by this court in the affirmative and in favour of the assessee on the footing that the question was answered by this court in the earlier judgment reported in CIT v. Eldee Wire Ropes Ltd. [1978] 114 ITR 485 (Bom). In CIT v. Eldee Wire Ropes Ltd . [1978] 114 ITR 485 (Bom) this court had taken a view that under section 35B of the Income-tax Act, 1961, where the Legislature desired to exclude the expenditure incurred in India for the purpose of giving the benefit of deduction to the assessee by way of export development allowance, it had expressly done so by speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it cannot be said that the expenditure was incurred wholly and exclusively for the sale of exported goods. In this view of the matter, the issue as referred must be answered in the affirmative and in favour of the Revenue. (b) As regards question No. 2, counsel for the parties agree that this question has been answered by this court in the case of Dr. Beck and Co. (India) Ltd. v. CIT reported in [1994] 206 ITR 311 and in the case of CIT v. Dr. Beck and Co. (Ind) Ltd. reported in [1999] 239 ITR 561 (Bom). On a perusal of these judgments, it is seen that both the judgments pertain to export inspection charges and hold that no weighted deduction is allowable under section 35B in respect of these charges. In our view, the expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f gifts given to foreign parties, the question will have to be decided in the negative and against the Revenue. In our view, the expenditure of such gifts given to foreigners would be covered under section 35B(1)(b)(a)(ix) which pertains to "such other activities for the promotion of the sale outside India as may be prescribed". This view as taken by us is supported by the view taken by the Karnataka High Court in the case of CIT v. H. M. T. (International) Ltd. [1993] 203 ITR 573 in which the Karnataka High Court held that expenditure incurred towards the complimentaries and give-aways to foreign delegates was an expenditure which had a direct nexus with the export activities of the assessee and, therefore, an assessee was entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court in the case of CIT v. J. K. Chemicals Ltd. reported in [1994] 207 ITR 985. In that case, it was held by this court that if an expenditure had been incurred on obtaining market survey for setting up of a new unit of manufacturing, the said expenditure amounted to capital expenditure. From the judgment of the Tribunal, it is noticed that in the present case, the assessee was manufacturing steel items and, therefore, conducted a market survey. In our view, therefore, by the very purpose and nature of the report the same pertains to a different line of business and must be held to be non-deductible capital expenditure. The question is, therefore, answered in the affirmative and in favour of the Revenue. (g) The counsel for the parti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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