DIPAK KUMAR SEN, J. - (1.) THIS reference arises out of the assessment of Birla Jute Manufacturing Co. Ltd., the assessee, to income-tax in the asst. yrs. 1973-74, 1974-75 and 1976-77. On an application of the assessee under s. 256(1) of the IT Act, 1961, the following questions have been referred as questions of law arising out of the order of the Tribunal for the opinion of this Court : 1. Question common to all the assessment years: " Whether, on the facts and in the circumstances of the case, the assessee is entitled to weighted deduction for export markets development allowance in respect of the various expenses which the Tribunal disallowed? " 2. Common question relating to the asst. yrs. 1973-74 and 1974- 75: " Whether, on the facts and in the circumstances of the case, the assessee's claim for deduction in respect of liability for surtax is allowable while computing the total income?" 3. Question relating to the asst. yr. 1973-74 : " Whether, on the facts and in the circumstances of the case, for the purpose of capital computation under s. 80J, the actual cost of depreciable assets as against the written down value should be taken into account ignoring r. 19A of the IT Rules, 1962 ? "
(2.) THE controversy raised in question No. 2 is covered by a decision of this Court in Molins of India Ltd. vs. CIT (1983) 35 CTR (Cal) 254:(1983) 144 ITR 317 (Cal). Following the said decision, we answer question No. 2 in the negative and in favour of the Revenue. The controversy raised in question No. 3 is similarly covered by a decision of this Court in Bharat General & Textile Industries Ltd. vs. CIT (1986) 53 CTR (Cal) 418:(1985) 153 ITR 747 (Cal). Following the said decision, we answer this question also in the negative and in favour of the Revenue. We state that in computing the capital employed for the purpose of deduction under s. 80J of the IT Act, 1961, the written down value of the assets should be considered and not the actual cost. The facts pertaining to question No. 1 are, inter alia, that in the asst. yr. 1973-74, the assessee claimed weighted deduction in respect of export markets development allowance before the ITO and was allowed such deduction in respect of some items. On an appeal before the AAC, the assessee subsequently claimed further deduction under s. 35B in respect of a number of additional items. The AAC allowed the assessee to make such further claim. The additional items for which the assessee claimed further deduction under s. 35B were, inter alia, as follows : (a) Commission in respect of export sales; (b) Salaries to export staff; (c) Ocean freight; (d) Bank charges; (e) Shipping expenses; (f) Postage, telegram and telephone; (g) Stationery and printing; (h) Staff welfare expenses; (i) Travelling expenses in India relating to export; (j) Marine insurance.
(3.) THE AAC allowed the claim of the assessee in respect of salaries to export staff, postage, telegram and telephone and stationery and printing and directed the ITO to allow weighted deduction on the said items in the proportion as between the total sales and export sales of the assessee. The AAC rejected the claim of the assessee in respect of the other items. On a further appeal by the assessee, the Tribunal allowed another item claimed by the assessee, viz., commission, in respect of export sales and disallowed the assessee's claim in respect of the other items which had also been disallowed by the AAC.;