Law:

Section:

Section 35B of the Income-tax Act, 1961 [as it stood in assessment years 1973-74, 1974-75 and 1976-77] - Export markets development allowance - Whether where assessee makes a general claim under section 35B in respect of staff welfare expenses of export staff and travelling expenses incurred in India in relation to exports on the basis of apportionment without furnishing details to establish that staff was deputed exclusively for purpose of obtaining information or for preparation and submission of tenders, claim could be accepted - Held, no FACTS The assessee claimed weighted deduction under section 35B, inter alia, in respect of staff welfare expenses incurred in relation to export staff and travelling expenses incurred in India in relation to exports. The Tribunal rejected the assessee's claim. On reference: HELD In order to be eligible for weighted deduction on the export markets development allowance, it was required to be established by the assessee that the expenditure for which such deduction was being claimed had been incurred wholly and exclusively for the specified purposes. On the facts on record, the assessee was not able to establish that the expenses incurred by it on account of staff welfare or for travelling in India was exclusively for obtaining information under clause (ii) or for preparation and submission of tenders for supply of goods outside India or activities incidental thereto under sub-clause (v) of section 35B(1)(b). The claim of the assessee was a general claim on the basis of apportionment. Particulars were not furnished by the assessee to establish that the staff for whose welfare expenditure was incurred were deputed exclusively for the aforesaid purpose of obtaining information or for preparation or submission of tenders. Similar particulars in respect of travelling expenses incurred were also not furnished. Unless such facts were brought on record and established, the assessee was not entitled to claim weighted deductions in respect of export markets development allowance in respect of the said two items. The case was remanded back to the Tribunal for being considered afresh in light of the above principles. CASE REVIEW Bharat…

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