Law:

Section:

Section 35B of the Income-tax Act, 1961 - Export markets development allowance - Assessment year 1980-81 - Assessee claimed weighted deduction in respect of establishment charges, steamer freight and insurance of CIF contracts - Tribunal disallowed claims of assessee - Whether since expenditure described as establishment charges could not be brought under any of sub-clauses of section 35B, said claim had rightly been disallowed - Held, yes - Whether since expenditure, viz., steamer freight and insurance of CIF contracts, incurred being part of cost of execution of contract for supply of goods outside India, there was no reason why those costs could not be regarded as amounts admissible under sub-clauses (viii) of section 35B(1)(b) for purpose of grant of weighted deduction - Held, yes CASES REFERRED TO CIT v. Stepwell Industries Ltd. [1997] 228 ITR 171/ 94 Taxman 280 (SC) [Para 1] and CIT v. Roadmaster Industries of India (P.) Ltd. [1993] 202 ITR 968/ 70 Taxman 176 (Punj. & Har.) [Para 3]. Sarath Chandran and K. Mani for the Applicant. Mrs. Chitra Venkataraman for the Respondent. JUDGMENT R. Jayasimha Babu, J. - Three questions have been referred to us at the instance of the assessee for the assessment year 1980-81. The first of those questions which concerns the eligibility of the assessee to claim weighted deduction in respect of a sum said to be described as establishment charges cannot be, as conceded by counsel, brought under any of the sub-clauses of section 35B of the Income-tax Act, 1961. That claim has rightly been disallowed. The first question is answered against the assessee. It has been held in the case of CIT v. Stepwell Industries Ltd. [1997] 228 ITR 1712 (SC), that the benefit of section 35B of the Act can be claimed only if the expenditure incurred can be brought under any one of the sub-clauses of that section. 2. So far as the second question in concerned, it concerns the claim for weighted deduction for steamer freight and insurance of CIF contract. The fact that the contract was CIF, and that the expenditure on steamer freight and insurance had been incurred in the amount claimed, viz., Rs. 8,74,365, is not in dispute. The Tribunal…

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