SEN, J. - (1.) THE Tribunal had made a consolidated statement of case to the Court under s. 256 (1) of the IT Act, 1961, r/w s. 18 of the Companies (Profits) Surtax Act, 1964. The assessment years involved are in 1974-75 and 1975-76. The questions arise out of the consolidated order of the Tribunal in IT Appeal Nos.1321, 1322, 1551 and 1552 (Cal.) of 1979 for which the corresponding R. A. Nos. were 849 to 852 (Cal.) of 1980.The following questions of law have been referred to this Court:-- "RANos 849 and 850 (Cal.) of 1980 1. Whether, on the facts and in the circumstances of the case and on a correct interpretation of s. 35B (1) (b) (viii) of the IT Act, 1961, the Tribunal was justified in holding that the expenditure of Rs. 16,14,215 and Rs. 22,83,134 for the respective assessment years incurred in India on the carriage of goods to their destination outside India did not qualify for the weighted deduction permissible under the said provisions? 2. Whether, on the facts and in the circumstances of the case and on a correct interpretation of s. 35B (1) (b) (iii) of the Act, the Tribunal was justified in holding that Rs. 1.47,192 and Rs. 70,251 for the respective assessment years incurred in India on the transportation of goods from the assessee's warehouses to ports for the purpose of export did not qualify for the weighted deduction permissible under the said provisions? RA Nos 851 and 852 (Cal.) of 1980 Whether, on the facts and in the circumstances of the case and on a correct interpretation of s. 35B (1) (b) (viii) of the IT Act, 1961, the Tribunal was justified in holding that the weighted deduction for export market development allowance was not admissible in respect of the following items of the expenditure incurred by the assessee-firm:-- 1. Interest paid to banks on packing Credit Loans obtained for export business. 2. Bank chargers paid in India in connection with negotiation of invoices for export business. 3. Duty of shipping charges paid to the Port CITs for export of goods. 4. Goods for warding charges incurred for export business".
(2.) THE facts in connection with these two questions as stated by the Tribunal are as under:-- The assessee is an exporter of tea and the relevant assessment years are 1974-75 and 1975- 76.The assessee claimed Rs. 16,14,215 and Rs. 22,83,134 as freight charges for the respective years to carry goods to destination outside India. Again, in the respective assessments sums of Rs. 1,47,192 and Rs. 70,251 being transport charges for carrying goods to docks for export outside India were claimed. The ITOs refused to allow export market development allowance under s. 35B of the Act in respect of the aforesaid two items of expenditure in both the assessments. The CIT (A) referred to certain order of the Tribunal in paragraph 9 of his order, and particularly following the Full Bench decision of the Bombay Tribunal for the asst. yr. 1973-74 in J.H. & Co. vs. Second ITO (IT Appeal Nos.3255 and 3330 of 1976-77) held that the aforesaid items would not fall for consideration under s. 35B. It has been contended on behalf of the assessee that the claim for weighted deduction under s. 35B in respect of these expenses were not allowed by the ITO, the CIT (A) and the Tribunal under s. 35B (1) (b) (iii). But the case of the assessee is that such expenses should be allowed under s. 35B (1) (b) (viii) . It has been contended that in the case of CIT vs. Bata India Ltd., (1989) 178 ITR 669 it was held by this Court that expenditures on the carriage of goods to their destination outside India or on the insurance of such goods while in transit were entitled to weighted deduction wherever expenditures might have been incurred. It has been claimed that, in view of the principles laid down in that judgment, the assessee was entitled to claim weighted deduction under s. 35B in the instant case. Sec. 35B is as under:-- "Export market development allowance:--(1) (a) Where an assessee, being a domestic company or a person (other than a company) who is resident in India, has incurred after the 29th day of February, 1968 whether directly or in association with any other person, any expenditure (not being in the nature of capital expenditure or personal expenses of the assessee) referred to in cl. (b) , he shall, subject to the provisions of this section, be allowed a deduction of a sum equal to one and one-third times the amount of such expenditure incurred during the previous year: (b) The expenditure referred to in cl. (a) is that incurred wholly and exclusively on-- (i) Advertisement on publicity outside India in respect of the goods, services or facilities which the assessee deals in or provides in the course of his business. (ii) obtaining information regarding markets outside India for such goods, services or facilities; (iii) distribution, supply of provision outside India of such goods, services or facilities, not being expenditure incurred in India in connection therewith or expenditure (wherever incurred) on the carriage of such goods to their destination outside India or on the insurance of such goods while in transit; (iv) maintenance outside India of a branch, office or agency for the promotion of the sale outside India of such goods, services or facilities; (v) preparation and submission of tenders for the supply or provision outside India of such goods, services, or facilities, and activities incidental thereto; (vi) furnishing to a person outside India samples or technical information for the promotion of the sale of such goods, services or facilities; (vii) travelling outside India for the promotion of the sale outside India of such goods, services or facilities, including travelling out ward from, and return to, India; (viii) performance of services outside India in connection with, or incidental to, the execution of any contract for the supply outside India of such goods, services of facilities; (ix) such other activities for the promotion of the sale outside India of such goods, services or facilities as may be prescribed. Explanation 1--In this section, 'domestic company' shall have the meaning assigned to it in cl. (2) of s. 80B. Explanation 2--For the purposes of sub-cl. (iii) and sub-cl. (viii) of cl. (b) expenditure incurred by an assessee engaged in the business of-- (i) operation of any ship or other vessel, aircraft or vehicle, or (ii) carriage of, or making arrangements for carriage of, passengers, livestock, mail or goods, on or in relation to such operation or carriage or arrangements for carriage (including in each case expenditure incurred on the provision of any benefit, amenity or facility to the crew, passengers or livestock) shall not be regarded an expenditure incurred by the assessee on the supply outside India for services or facilities." Under s. 35B, the assessee is allowed a deduction of more than what he has actually spent. This is ** ** ** to encourage development of export trade. In order to claim this deduction the assessee must establish that all the conditions for claiming the deduction have been fulfilled. When the assessee claims a deduction of the nature mentioned in s. 35B, he must strictly bring himself within the specific conditions laid down in the section for getting weighted deduction. The first part of s. 35B which is sub-s. (1) (a) merely declares that the assessee, who fulfills the conditions laid down in s. 35B, will be allowed a deduction of a sum equal to one and one-third times of the amount of expenditures incurred during the previous year if the expenditures were of the nature referred to in cl. (b). Clause (b) of s. 35B (1) lays down that the expenditures must be incurred wholly and exclusively on the activities mentioned in sub-cls. (i) to (ix) Sub-cl. (iii) has specifically laid down that expenditure (wherever incurred) on the carriage of such goods to their destination outside India or on the insurance of such goods while in transit will not qualify for weighted deduction. The question that has been referred is confined to s. 35B (i) (b) (iii) . Therefore, the claim of the assessee will have to be examined under the specific provision of the statute. In view of the limited scope of the question, it is not open to the assessee at this stage to contend that the claim is otherwise allowable under s. 35B (1) (b) (viii) . Even if this question is allowed to be argued, I fail to see how the expenditure incurred on transportation of exportable goods to their destination outside India can come within the provision of performance of services outside India in connection with, or incidental to, the execution of any contract for the supply outside India of such goods, services or facilities. Under sub-cl. (viii) , the expenditure incurred on the supply of goods outside India is not allowable as such. What is allowable is expenditures wholly and exclusively incurred for "performance of services outside India in connection with, or incidental to, the execution of any contract" for the supply of such goods. The expenditures incurred for the execution of any contract for supply of goods outside India can only be done by sending such goods outside India. But the weighted deduction is provided not for the expenditure wholly and exclusively incurred for execution of the contract for supply of goods, but for performance of services outside India in connection with or incidental to the execution of the contract. Therefore, even under sub-cl. (viii) expenditure incurred in India for the purpose of carriage of goods to their destination outside India will not quality for weighted deduction. 4. Moreover, what is specifically forbidden to be allowed as weighted deduction under sub-cl. (ii) cannot be allowed under sub-cl. (viii) by giving an extended meaning to the general words employed in that sub-clause. The various sub-clauses under cl. (b) of s. 35B (1) have tried to enumerate the various categories of expenditure which will qualify for weighted deduction. If a particular category has been specifically mentioned as not allowable in any of the sub-clauses, then that specificaly excluded expenditure cannot be allowed as a weighted deduction under any other sub-clause. The construction suggested on behalf of the assessee will lead to absurdity and must be avoided. The legislature has specifically forbidden allowance of weighted deduction of expenditure on the insurance of such goods while in transit in sub-cl. (iii) which deals with distribution, supply or provision of goods meant for export. The manifest intention of the legislature cannot be defeated by giving an extended meaning to the provision of sub-cl. (viii) so as to allow weighted deduction on expenditure on the carriage of goods to their destination or on the insurance of such goods while in transit. It is difficult to comprehend why the legislature should forbid specifically and in clear words deduction of expenditure incurred on the carriage of goods to their destination outside India or on the insurance of such goods while in transit but at the same time allow these very expenditures as deduction under sub-cl. (viii) by implication. The clear language of sub-cl. (viii) does not warrant such a construction.
(3.) AN argument was also advanced on the strength of the decision of the Court in the case of Bata India Ltd. (supra) that this Court has held that all the activities mentioned in sub-cls. (i) to (viii) are activities for promotion of sale outside India and, therefore, if it can be established that the expenditure was for promotion of sale outside India, then such expenditure will qualify for weighted deduction.;