Law:

Section:

Section 35B of the Income-tax Act, 1961 - Export markets development allowance - Assessment years 1978-79 and 1980-81 - Assessee who represented foreign principals and assisted them in procuring leather from local suppliers who actually exported those goods claimed benefit of weighted deduction under section 35B for various services rendered to its principals - Whether as assessee was transmitting information about Indian market conditions to its principals abroad and not information about market conditions outside India to Indian exporters and as other activities carried on by it were directly linked to providing assistance in various matters to foreign principals, none of which could be regarded as activities qualifying for weighted deduction, assessee was not entitled to relief under section 35B in respect of expenses claimed in assessment years in question - Held, yes FACTS The assessee was a commission agent. It represented foreign principals, those principals being persons engaged in the manufacture of leather goods. The assessee assisted those principals in procuring leather from the local suppliers. The actual exports of the goods were made by the local traders or manufacturers in leather and not by the assessee. The assessee claimed the benefit of section 35B. The Assessing Officer allowed the deduction only in respect of the expenditure on travel and rejected the claims made under all the other heads. The services rendered by the assessee as set out by the assessee itself and as noted by the Tribunal in its order were : 1. Collection of data regarding market trends and prices situation, supply conditions, etc., in India and sending periodically reports thereon. 2. Keeping in touch with the principals on day-to-day basis through telephone and telex regarding any immediate situation developing in the market. 3. Ascertaining the principals' requirements and taking steps to procure materials from the market on best possible terms. 4. Following up the orders placed, inspection of goods, as well as ensuring timely dispatches of the materials ordered. 5. Arranging for settlement of disputes between the principal and local suppliers, which may arise with…

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