- (1.) The following question of law came up for consideration before the High Court under Section 256(2), Income-tax Act, 1961 : "Whether, on the facts and in the circumstances of the case, the I.T.A.T. was correct in law in holding that the assessee was entitled to weighted deduction u/S. 35-B of the Income-tax Act, 1961 in respect of commission payment of Rs. 1,46,678/- -
(2.) The High Court declined to entertain this question. Hence this appeal to this Court.
(3.) The assessee's goods were sold by the State Trading Corporation of India Limited to various parties outside India. The assessee claimed weighted deduction under Section 35-B(1)(b)(i) and (iv). The claim of the assessee is not admissible on these facts. The weighted deduction is allowed for activities carried out wholly and exclusively on the various purposes set out in sub-clauses (i), (ii), (v), (vii), (viii) and (ix) of Section 35-B(1)(b). Section 35-B allowed at the material time deduction of a sum equal to one and one third times of the amount of such expenditure incurred during the previous year. In order to get this kind of deduction, the onus lies heavily on the assessee to prove that the expenditure falls within any of the purposes set out in various sub-clauses of Clause (b) of Section 35-B(1). Merely because some activities took place outside India will not qualify the expenditure for the deductions mentioned in Section 35(B). If the State Trading Corporation incurs expenditure for an advertisement or publicity outside India, the assessee will not be entitled to any deduction unless the assessee can establish that the advertisement or publicity was being done outside India for and on behalf of the assessee and in respect of goods the assessee deals in or provides in course of his business. Likewise, if the State Trading Corporation maintains a branch office or agency for the promotion of sale outside India, the assessee cannot claim any deduction on account of maintenance of such branch office or agency but if such branch office or agency is maintained by the assessee himself for the promotion of sale outside India of his goods, services or facilities, then the assessee will be entitled to a deduction under Section 35-B.;