SENGUPTA, J. - (1.) IN this reference under S. 256(1) of the IT Act, 1961 ('the Act') for the asst. yr. 1977-78 following question of law has been referred to this Court: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee was not entitled to the weighted deduction under S. 35B of the IT Act, 1961?"
(2.) SHORTLY stated, the facts are that the assessee-company carried on the business of general insurance. The assessment year involved is 1977-78. The assessee claimed weighted deduction under S. 35B of the Act in respect of 50 per cent management expenses incurred by its overseas branches. This claim was, however, not considered by the ITO. At the stage of hearing under s. 144B of the Act, this claim was pressed before the IAC who, however, rejected the claim on the ground that the relief under S. 35B is not applicable to insurance company. The assessee appealed to the CIT (A) who noted that S. 44 of the Act under which the income of the assessee was to be computed clearly provides that the profits and gains of the insurance business shall be computed in accordance with the rules contained in the First Schedule and that the provisions of ss. 38 to 43A of the Act were not applicable. He pointed out that the First Schedule does not contain any provision for making adjustment than what was specified by r. 5. The CIT (A) relied on the decision of the Madras High Court in the case of United India Fire & General Insurance Co. Ltd. vs. CIT (1983) 144 ITR 638 (Mad) and rejected the contention of the assessee.
(3.) THE assessee then came up in second appeal before the Tribunal. It was urged that although the income of the assessee was computed under S. 44 read with the rules contained in the First Schedule, the claim of the assessee for relief under S. 35B was wrongly rejected. It was submitted that the relief may be allowed now. The learned Departmental Representative supported the order of the CIT (A). The Tribunal following the decision of the Madras High Court in the case of United India Fire & General Insurance Co. Ltd. (supra) held that this claim of the assessee was rightly rejected by the CIT (A). The order of the CIT (A) on the point was upheld. Before us the contentions raised before Tribunal have been reiterated.;