Law:

Section:

Section 35B of the Income-tax Act, 1961 - Export markets development allowance - Whether weighted deduction was not allowable on amount of freight and insurance charges - Held, yes Section 80J of the Income-tax Act, 1961 - Deductions - Profits and gains from new industrial undertakings, ships or hotels, etc - Whether written down value of depreciable assets and not their original cost should be taken into account in computing capital employed for purpose of relief under section 80J - Held, yes Section 40(a)(ii) of the Income-tax Act, 1961 - Business disallowance - Taxes - Whether surtax liability for year could not be deducted in arriving at total income under Act - Held, yes FACTS The Tribunal held that weighted deduction under section 35B could not be allowed on freight and insurance charges, that the surtax liability for the year could not be deducted in arriving at the total income under the Act and that the written down value of the depreciable assets and not their original cost should be taken into account in computing the capital employed for the purpose of calculating the deduction allowed under section 80J. On reference: HELD In view of decision of same High Court in Bharat General & Textile Industries Ltd. v. CIT [1985] 153 ITR 747, the Tribunal was right in holding that weighted deduction under section 35B could not be allowed on amounts of freight and insurance charges and that the written down value of depreciable assets and not their original cost should be taken into account in computing capital employed for the purpose of calculating deduction allowed under section 80J. In view of a decision of same High Court in Molins of India Ltd. v. CIT [1983] 144 ITR 317, the Tribunal was right in holding that surtax liability for the year in question could not be deducted in arriving at the total income under the Act. Note : The case was decided against the assessee. CASE REVIEW Bharat General & Textile Industries Ltd. v. CIT [1985] 153 ITR 747 (Cal.); Molins of India Ltd. v.CIT [1983] 144 ITR 317 (Cal.) followed and relied upon. CASES REFERRED TO Bharat General & Textile Industries Ltd. v. CIT [1985] 153 ITR 747 (Cal.) and Molins of India…

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