Law:

Section:

Section 35B of the Income-tax Act, 1961 - Export markets development allowance - Whether to avail benefit of weighted deduction under section 35B, provision does not require that export should be ex-India - Held, yes Section 56 of the Income-tax Act, 1961 - Income from other sources - Chargeable as - Whether interest received by assessee from short-term deposits cannot be assessed under head 'Income from business' but to be assessed as income from other sources - Held, yes CASE REVIEW CIT v. Bombay Burmah Trading Corpn. [2000] 242 ITR 298 (SC), Tuticorin Alkali Chemicals and Fertilizers Ltd. v. CIT[1997] 227 ITR 172 (SC) and South India Shipping Corpn. Ltd. v. CIT[1999] 240 ITR 24 (Mad.)followed & relied upon. CASES REFERRED TO CIT v. Bombay Burmah Trading Corpn. [2002] 242 ITR 298/ 109 Taxman 72 (SC) [Para 2],Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT[1997] 227 ITR 172/ 93 Taxman 502 (SC) [Para 3], South India Shipping Corpn. Ltd. v. CIT[1999] 240 ITR 24/ 105 Taxman 660 (Mad.) [Para 4],Phillips Carbon Blocks Ltd. v. CIT[1982] 136 ITR 205/10 Taxman 195 (Cal.) [Para 4] and Addl. CIT v. Madras Fertilizers Ltd.[1980] 122 ITR 139 (Mad.) [Para 4]. Mrs. Chitra Venkataraman for the Applicant. ORDER V.S. Sirpurkar, J. - Two questions are referred to us. They are : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee is entitled to weighted deduction under section 35B on foreign travel, advertisement, foreign branch expenses, etc. though the assessee was only purchasing goods from China and selling the same in USA and no export of Indian goods was carried on ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the interest received by the assessee from the fixed deposit of surplus funds should be assessed under the head 'Business' ?" 2. We shall take the first question first. The Tribunal has held in favour of the assessee on the basis of its earlier orders for the assessment years 1981-82 and 1982-83. The case of the department is, however, that the assessee is not exporting any goods and admittedly the goods are being purchased…

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