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Section 35B of the Income-tax Act, 1961 - Export markets development allowance - Assessment year 1978-79 - Assessee-company, which was engaged in business of consultancy services, claimed deduction of expenditure incurred on foreign travel of its managing directors abroad - It also claimed deduction under section 35B on said amount - ITO as well as Commissioner (Appeals) disallowed assessee's claim - Tribunal, however, allowed assessee's claim - Whether since Tribunal failed to apply parameters laid down by Supreme Court in cases of CIT v. Stepwell Industries [1997] 228 ITR 171 and CIT v. Hero Cycles [1997] 228 ITR 463, matter required to be reconsidered by Tribunal - Held, yes [Matter remitted back to Tribunal] FACTS The assessee-company was engaged in the business of consultancy services. During the previous year relevant to assessment year 1978-79, the assessee claimed as revenue expenditure the expenses incurred on the foreign travel of its managing director, abroad. Weighted deduction on the said amount under section 35B was also claimed. The ITO took the view that the managing director had gone abroad in order to instal a separate manufacturing concern in India and as the project for installation did not materialise, the expenses on foreign tour could not be allowed as revenue expenditure. The ITO further held that since the assessee had not made any exports, it was not entitled to weighted deduction under section 35B. On second appeal, the Tribunal, however, allowed the expenditure in question as business expenditure. It further held that on the said amount the assessee was also entitled to weighted deduction under section 35B. On reference: HELD The principles and parameters, governing the allowance of weighted deduction under section 35B are now well settled in view of decisions of the Supreme Court in Stepwell Industries Case [1997] 228 ITR 171 and Hero Cycles Case [1997] 228 ITR 463. In the instant case, the Tribunal had failed to apply the parameters laid down by the Apex Court in the aforenoted decisions and therefore, the matter required to be reconsidered by the Tribunal. [Matter remitted back to Tribunal] CASES REFERRED TO CIT v. Hero Cycles…

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