Law: Income Tax Act, 1961

Section: 35B(1)(b)

(a) Income-tax-----Export markets development allowance---Weighted deduction ---Export inspection agency fees---Eligible for weighted deduction---Premium paid to Export Credit Guarantee Commission to insure against non-recovery of price from foreign buyer---Eligible for weighted deduction--Export pre-shipment advance interest---Not eligible for weighted deduction---Indian Income Tax Act, 1961, S.35B(1)(b). (b) Income-tax--- ----Business expenditure---Company---Registration fees paid to Registrar of Companies for increasing capital---Not capital expenditure ---Deductible--¬Indian Income Tax Act, 1961, S.37. (c) Income-tax--- ----Business expenditure---Company---Surtax---Not deductible in income-tax assessment---Indian Income Tax Act, 1961, S.37. . (d) Income-tax--- ----Company---Company in which public are . substantially interested--¬Assessee not a company in which public are substantially interested---Indian Income Tax Act, 1961, S.2(18)(b). The qualification for weighted deduction under section 35B(1)(b)(vi) of the Income Tax Act, 1961, is the furnishing of technical information for the promotion of export sales. Unless export inspection is done and a certificate is obtained, goods cannot be exported to foreign countries. The certificate issued by the export inspection agency would amount to furnishing technical information with regard to the goods to be exported. Export inspection agency fees are, therefore, eligible for weighted deduction under section 35B(1)(b)(vi). Union Carbide India Ltd. v. CIT (1987) 165 ITR 558 (Cal.) fol. Where the assessee paid a sum by way of premium to the Export Credit Guarantee Commission partly for covering risk during transit of goods and partly for the Corporation's standing guarantee to the assessee in respect of the goods exported for the purpose of recovery of the value of the goods and the Tribunal confirmed the order of the Commissioner of Income-tax (Appeals) holding that part of the payment relating to coverage of risk in transit alone was eligible for weighted deduction, on a reference: Held, that payment made to the Export Credit Guarantee Corporation to ensure the financial capacity of the foreign buyer to fulfil…

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