Law:

Section:

Section 35B of the income tax act, 1961-Export markets development allowance-Assessee was a partner in a non-resident firm which imported goods from India-Tribunal found that neither firm nor assessee exported any goods from India-Whether assessee entitled to weighted deduction under section 35b in respect of expenditure incurred by said firm for carrying on its business abroad-Held, on facts, no Facts The assessee was a partner in a non-resident firm which imported goods from India. The firm had no branch in India. For the assessment year 1970-71, the ITO allowed the assessee's claim of deduction under section 35B in respect of the expenditure incurred by the firm for carrying on its business abroad. However, the Additional Commissioner, acting under section 263, withdrew the allowance. For the assessment year 1971-72, the assessee's claim for a similar deduction under section 35B was rejected by the ITO as well as by the AAC on the ground that the assessee had not carried on any export business in India as required by section 35B. On further appeal, the Tribunal confirmed the orders of the Additional Commissioner and the AAG for the respective assessment years as the Tribunal found that the firm had not exported any goods from India and neither had its partners exported any goods on behalf of the firm. On reference, the assessee contended that under the law, any business carried on by a firm is business carried on by its partners and hence the assessee's carrying on business abroad in partnership with others should be taken to be carrying on a business to which section 35 could be applied. He also contended that the non-existence of business in India is of no consequence. Held A perusal of section 35B would show that the entire provision is intended to develop the export market for Indian goods. The way in which the provision is designed shows that the expenditure must have been incurred in effecting exports from India. The section is designed only to help the Indian exporter of goods from India and is not intended to help non-resident entities carrying on business outside India. The postulate of the section appears to be that there must be an export by the…

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