COMMISSIONER OF INCOME TAX vs NATIONAL PALAYACOT CO.

N. V. BALASUBRAMANIAN, J.

This is a petition filed by the CIT, Tamil Nadu V, Madras, under s. 256(2) of the IT Act, 1961, to direct the Tribunal to state a case and refer the

following question of law for the asst. yr. 1982-83:

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 claim relief for

weighted deduction under s. 35B(1)(b) of the IT Act, 1961 in respect of expenditure like customs duty, sales-tax etc. incurred for maintenance of

a branch outside India?

The Tribunal followed an earlier decision of this Court in Commissioner of Income Tax Vs. Kasturi Palayacat Co., , and held that the assessee

would be entitled to deduction under s. 35B(1)(b) on the expenditure incurred for maintenance outside India of a branch for the promotion of the

sale outside India of the goods of the assessee. The Revenue filed an application under s. 256(1) of the IT Act on the ground that the earlier

decision of this Court has not become final. The Tribunal, however, rejected the application on the ground that this Court in the case of Best &

Crompton Engg. Ltd. in TCP No. 95 of 1987 by order dt. 15th Feb., 1988 has rejected the tax case petition. The present tax case petition has

been filed on the ground that the Supreme Court has granted special leave to appeal against the decision of this Court in CIT vs. Kasturi Palayacat

Co. (supra) in SLP (Civil) Nos. 10326 to 10329 of 1980 by order dt, 22nd July, 1983 and it is reported in Commissioner of Income Tax Vs.

Salkia Transport Associates, . Learned senior counsel for the Department has submitted that the appeal is still pending before the Supreme Court.

Mr. Yasod Varadhan for the assessee has placed before us a subsequent order of the Supreme Court in SLP (Civil) Nos. 16520 of 1994,

wherein by an order dt. 8th Aug., 1994, the Supreme Court has dismissed the SLP filed by the Revenue to appeal against an order of this Court in

TCP No. 414 of 1989 dt. 22nd Feb., 1990, wherein this Court has rejected the reference application filed by the Revenue following the decision

of this Court in CIT vs. Kasturi Palayacat Co. (supra) holding that the weighted deduction under s. 35B of the IT Act, 1961, is available to an

assessee, even if it did not deal in the goods in question in India, so long as it dealt with those goods abroad and exported the said goods. The

dismissal of the SLP is reported in (1994) 210 ITR 7. The facts of the instant case are similar to the facts in TCP No. 414 of 1989. Hence,

following the order of the Supreme Court in SLP (Civil) No. 16520 of 1994 dt. 8th Aug., 1994 (supra) dismissing the SLP filed against the order

of this Court in TCP No. 414 of 1989 dt. 22nd Feb., 1990, we are of the opinion that no referable question of law arises out of the order of the

Tribunal. Accordingly, we dismiss the tax case petition. There will, however, be no order as to costs.

OPEN