Commissioner of Income Tax vs Mehta Pharmaceuticals Pvt. Ltd.

N.K. Agrawal, J.—The following question of law has been referred by the Income Tax Appellate Tribunal, Amritsar (for short, "the Tribunal"), at the instance of the Commissioner of Income Tax u/s 256(1) of the Income Tax Act, 1961 (for short, "the Act") :

"Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the assessee is entitled to the allowance of weighted deduction u/s 35B in respect of the expenditure on the payment made to Export Credit Guarantee Corporation and on the payment of office rent ?"

The assessee-company was engaged in the extraction of basic raw materials for various types of herbs for the purposes of medicine. The assessee had claimed weighted deduction for the assessment year 1979-80 u/s 35B of the Act on the amount of Rs. 12,049 paid to the Export Credit Guarantee Corporation for obtaining a certificate. This claim was disallowed by the Assessing Officer.

In appeal, the Commissioner of Income Tax accepted the assessee''s plea for the grant of weighted deduction on the payment made to the aforesaid corporation. It was challenged by the Department before the Tribunal but the Tribunal also accepted the assessee''s plea for allowing weighted deduction.

The controversy is no more res integra in the light of this court''s order dated July 30, 1997, in Income Tax Reference No. 100 of 1982 in the case of the assessee itself relating to the assessment year 1976-77. The question has been examined by this court and it has been held that the assessee was entitled to get weighted deduction on the payment made to the Export Credit Guarantee Corporation.

Following the view taken in the case of the assessee for the assessment year 1978-77, the question is answered in the affirmative, i.e., in favour of the assessee and against the Revenue.