Law: Income Tax Act, 1961

Section: 40(a)(v)&40(c)

Income-tax---Business expenditure---Company---Ceiling on expenditure ---Remunera­tion to employees---Remuneration for employment outside India not to be taken into account for purposes of computing ceiling---Indian Income Tax Act, 1961, Ss.40(a)(v) & 40(c). Provisions of section .40(c)(iii)/40(a)(v) of the income Tax Act, 1961, did not apply in the case of employees of the assessee in its overseas branches. CIT v. Continental Construction Ltd. (1998) 230 ITR 485 (SC) fol. (b) Income-tax-- ----Export markets development allowance---Weighted deduction---Condition precedent---Not necessary that exports should be made directly from India--­Expenditure incurred on export of tea from East Africa to U.K.---Entitled to weighted deduction---Indian Income Tax Act, 1961, S.35B. On a plain reading of the provisions of subsection (1) of section 35B it is clear that to claim the benefit of this section the following conditions have to be satisfied`. (i) the assessee must be a domestic company which is resident in India; (ii) it must have incurred expenditure after February 29, 1968 but before March 1, 1983; (iii) such expenditure should not be in the nature of capital expenditure or personal expenses of the assessee; (iv) the expenditure might have been incurred either directly or in association with any other person; and (v) the nature of the expenditure must answer the description referred to in any one of the sub-clauses of clause (b). On these requirements being satisfied the assessee-company becomes entitled to the weighted deduction under section 35B. It is not necessary that the export should be directly ex-India (from India): Held, that though a copy of the return containing details of the expenditure claimed under section 35B had not been placed on record, the orders of the departmental authorities as well as of the Tribunal and of the High Court made it clear that the weighted deduction under section 35B was claimed in respect of the expenditure incurred with regard to the performance of the services outside India. i.e., in East Africa and the United Kingdom in connection with the execution of the contract for the supply of tea in the United Kingdom. The…

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