STATEMENT OF THE CASE - (1.)THESE are in all 12 cross Reference Applications of the department and the assessee. The assessment years involved are 1979-80 to 1982-83. THESE applications arise out of the Tribunal's orders dated 25-3-1988 for Assessment Year 1979-80 and three other separate orders, all dated 18-7-1988, for the Asstt. Years 1980-81 to 1982-83.
(2.)The assessee is M/s. Jhalani Tools (India) Pvt. Ltd. (formerly M/s. Gedore Tools (India) (P.) Ltd.), Gedore House, 51-52 Nehru Place, New Delhi. It is a private limited company carrying on the business of manufacturing hand tools, most of which are exported. For the Asstt. Years 1979-80 and 1980-81 the Appellate Tribunal had not upheld the assessee's claim of weighted deduction under the following heads (the amounts are different for the two years in question and are not being mentioned here): -
(a) Interest on post shipment export credit loan;

(b) Exchange rate difference;

(c) Inland freight on export consignment;

(d) Ocean freight on export consignment;

(e) Forwarding charges on export consignment; (f) Inspection fee on exports;

(g) Insurance charges regarding exports;

(h) Bank charges on exports;

(i) 50% of general charge on exports;

(j) 50% of postage, telegram, telephone regarding exports;

(k) 50% of printing and stationary on exports.

The Appellate Tribunal, following the decision of the Special Bench in the case of J.H. & Co. v. Second ITO [1982] 1 SOT 150 (Bom.) as also the following earlier orders of the Tribunal in the assessee's own case, did not accept the assessee's claims of weighted deduction in respect of the items mentioned above: -

(1) Order dated 29-5-1985 of Delhi Bench 'D' of the Appellate Tribunal (ITA Nos. 1143/Del/1979 and 1826/Del/1979) for A.Y. 1975-76.

(2) Order dated 29-5-1985 of Delhi Bench 'D' of the Appellate Tribunal (ITA No. 696/Del/1982) for the A.Y. 1976-77.

In this connection, paras 4 to 4.3 of the order of the Special Bench for the A.Y. 1979-80 are relevant. The same view was held for the A.Y. 1980-81. So far as the Asstt. Years 1981-82 and 1982-83 are concerned, the assessee's Reference Applications Nos. 1258 & 1259/Del/88 only refer to the claim at (a) above. In department's RA No. 1304/Del/88 for A.Y. 1980-81 questions are proposed in respect of the claims at (j) & (k) above.

So far as the A.Y. 1982-83 is concerned, the department's RA Nos. 1306 & 1309/Del/88 refer to the upholding of the order of the Commissioner of Income-tax (Appeals) allowing weighted deduction on expenses in respect of laboratory and quality control specially since the accounting year of the assessee ended on 30-6-1981 whereas Rule 6AA of the Income-tax Rules, 1962 came into effect from 1-8-1981. For the A.Y. 1982-83 this aspect of the matter has been dealt with in paras 9 and 10 of the Tribunal's order dated 18-7-1988. The Appellate Tribunal had taken the view that the assessment was pending on 1-8-1981 when Rule 6AA was introduced and therefore, the claim could not be considered thereunder.

(3.)FOR all the assessment years involved in these Reference Applications another question involved related to the claim of weighted deduction on the expenditure on packing material consumed exclusively for exports. The case of the assessee was that the expenditure was not entirely for packing materials but that special and attractive plastic wrappers used should be taken as samples for goods and that this special wrapping had been used entirely for the purpose of development of export markets. The wrappers in question, it was explained before the Tribunal, were made out of beautiful expensive plastic and were colourful and were meant to be of durable nature or they were more or like beautiful souvenirs to customers who purchased the assessee's goods. FOR the year prior to 1979-80 also this point had come up before the Appellate Tribunal and it was directed that these should be considered as samples and that if the assessee was in a position to separate their cost, the same should be given the benefit of deduction under Section 35B. It was also directed that the total claim of the assessee in that regard would be subject to bifurcation, if necessary, after being subjected to the scrutiny of the Income-tax Officer. FOR the earlier years the Income-tax Officer had, after verification, allowed 25% of such expenses on packing materials. Following the earlier order, the Special Bench of the Appellate Tribunal for the assessment year 1979-80 similarly restored this matter to the file of the Inspecting Asstt. Commissioner (Assessment) with directions to him to examine and scrutinise the expenses in respect of packing materials as in the past and to allow weighted deduction thereon accordingly. (In this connection para 4.3 of that order is relevant). The same order was followed by the Appellate Tribunal in its separate orders dated 18-7-1988 for the subsequent 3 assessment years 1980-81 to 1982-83.