AJIT K.SENGUPTA,J. - (1.) IN this reference under Section 256(1) of the Income -tax Act, 1961, for the assessment year 1980 -81, the following questions of law have been referred to this court : '1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in directing the Income -tax Officer to allow relief under Section 35B(1)(b)(iii) of the Income -tax Act, 1961, on warehousing expenses of Rs. 10,16,517 if, on examination, he finds that the storage charges were for keeping the goods before their sale ?
(2.) WHETHER , on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that although Rule 6AA of the Income -tax Rules, 1962, was introduced with effect from August 1, 1981, it would be applicable in this case as the assessment has been completed on September 11, 1984 (i.e., after introduction of the said rule) and, in that view, whether the Tribunal was correct in law in directing the Income -tax Officer to examine the assessee's claim for relief under Section 35B(1)(b)(ix) read with Rule 6AA of the Income -tax Rules, 1962, as an alternative contention?' 2. The facts are that the assessment for the assessment year 1980 -81 was completed by the Income -tax Officer under Section 143(3) read with Section 144B of the Income -tax Act, 1961, on September 11, 1984. The Commissioner of Income -tax, on a scrutiny of the assessment records, found that the Income -tax Officer had wrongly allowed weighted deduction under Section 35B of the following : Rs.(a) Expenses on maintenance of a warehouse outside India10,16,517(b) Commission charges paid outside India5,75,051(c) Insurance charges paid outside India14,508 Notice under Section 263 dated November 7, 1986, was issued and served on the assessee. After considering the objections filed by the assessee, the Commissioner of Income -tax found that there was no cause for interference with the allowance of weighted deduction in regard tothe payment of commission of Rs. .5,75,051 ouside India. It was submitted by the assessee that the expenditure on the payment of warehouse charges of Rs. 10,16,517 would be allowable under Section 35B(1)(b)(iii) and that the Income -tax Officer did not commit any mistake in allowing weighted deduction. It was also urged that weighted deduction would be allowable under Section 35B(1)(b)(ix) read with Rule 6AA of the Income -tax Rules, 1962, as well. The Commissioner of Income -tax held that the expenditure on maintenance of a warehouse outside India was allowable under Section 35B(1)(b)(ix) read with Rule 6AA of the Income -tax Rules, 1962, only with effect from August 1, 1981, and, therefore, deduction under this section was not admissible for the assessment year 1980 -81. In that view of .the matter, he held that the Income -tax Officer incorrectly allowed weighted deduction in respect of the sum of Rs. 10,16,517 and, to this extent, the order of the Income -tax Officer was erroneous in so far as it was prejudicial to the interests of the Revenue. He also held that the Income -tax Officer committed a mistake in allowing weighted deduction in respect of insurance charges paid outside India during the accounting period which ended on December 31, 1979. The action of the Income -tax Officer in allowing weighted deduction on insurance charges of Rs. 14,508 was considered to be erroneous in so far as it was prejudicial to the interests of the Revenue. The Commissioner of income -tax, therefore, directed the Income -tax Officer to amend the assessment order by withdrawing the weighted deduction in respect of the sums of Rs. 10,16,517 and Rs. 14,508 as mentioned above.
(3.) BEING aggrieved by the order of the Commissioner of Income tax, the assessee preferred an appeal before the Tribunal. At the time of hearing, the assessee did not press the ground relating to the incorrect allowance of weighted deduction on insurance charges paid outside India amounting to Rs. 14,508. This ground was, accordingly, dismissed.;