Law: Income Tax Act, 1961

Section: 35B,35(B)(1)(b)

Law: Income Tax Act, 1961

Section: 35B,35(B)(1)(b)

Section 35B of the Income-tax Act, 1961 - Export markets development allowance - Whether export markets development allowance would be allowable under section 35B(1)(b) in respect of expenditure incurred for foreign indenting business where services in this connection were rendered in India - Held, no FACTS The Tribunal held that the assessee-company was entitled to export markets development allowance under section 35B(1)(b) in respect of expenditure incurred for foreign indenting business even though the services in this connection were rendered in India. On reference, the High Court upheld the Tribunal's views. On special leave petition: HELD In CIT v. Stepwell Industries Ltd. [1997] 228 ITR 171/ 94 Taxman 280 ( SC), it was held that weighted deduction under section 35B could not be allowed on commission paid to a party in India with regard to the sales made outside India. The principle enunciated in the said decision was clearly applicable in the instant case. Therefore, the Tribunal was not justified in allowing weighted deduction to the assessee. Decision of the Bombay High Court reversed. CASES REFERRED TO CIT v. Prakash Cotton Mills (P.) Ltd. [1991] 188 ITR 713/ 64 Taxman 145 (Bom.) and CIT v. Stepwell Industries Ltd. [1997] 228 ITR 171/ 94 Taxman 280 (SC). JUDGMENT 1. Delay condoned. 2. Special leave granted. 3. On an application filed by the appellant, the Tribunal had referred the following question…

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