SUHAS CHANDRA SEN, J. - (1.) THE Tribunal has referred the following two questions of law under s. 256(1) of the IT Act, 1961 : " (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in disallowing the claim for weighted deduction under s. 35B on the following items : (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in disallowing the claim for deduction of tax under the Companies (Profits) Surtax Act, 1964, in computing the assessee's total income ?"
(2.) THE relevant assessment year is 1975-76 (accounting year ended on 29th June, 1974). The first question relates to weighted deduction claimed by the assessee. Since there are as many as six items in respect of which deductions have been claimed, this question will have to be examined itemwise. Sec. 35B is as under : "35B. (1)(a) Where an assessee, being a domestic company or 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 sum equal to one and one-third times the amount of such expenditure incurred during the previous year : . Rs. (i) Packing credit interest 20,73,537 (ii) Post-due/overdue interest on export 8,24,280 (iii) Bank charges including cost of remittance 4,06,141 (iv) Exchange losses in export 19,965 (v) Freight and insurance 1,05,76,274 (vi) Packing and handling 92,87,092
(3.) PROVIDED that in respect of the expenditure incurred after the 28th day of February, 1973, by a domestic company, being a company in which the public are substantially interested, the provisions of this clause shall have effect as if for the words 'one and one-third times', the words 'one and one-half times' had been substituted. (b) The expenditure referred to in cl. (a) is that incurred wholly and exclusively on - (i) advertisement or 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 or 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 outward 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 or facilities ; (ix) such other activities for the promotion of the sale outside India of such goods, services or facilities as may be prescribed ; Expln. 1. -In this section 'domestic company' shall have the meaning assigned to it in cl. 2 of s. 80B. Expln. 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 arrangement 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 as expenditure incurred by the assessee on the supply outside India of services or facilities. (2) Where a deduction under this section is claimed and allowed for any assessment year in respect of any expenditure referred to in sub-s.(1), deduction shall not be allowed in respect of such expenditure under any other provision of this Act for the same or any other assessment year. " ;