Commissioner of Income Tax vs Smt. Sudesh Madhok

D.K. Jain, J.—At the instance of the Revenue, Tribunal, New Delhi, has referred u/s 256(1) of the IT Act, 1961 (for short the Act), the following question for our opinion :

"Whether, on the facts and in the circumstances of the case, the assessed is entitled to weighted deduction u/s 35B of the IT Act, 1961, in respect of the interest payment of Rs. 2,55,657 made to the Bank of Maharashtra on packing credit ?"

Since in our opinion answer to the question referred stands concluded by the decisions of the apex Court in Commissioner of Income Tax, Delhi Vs. Stepwell Industries Ltd. and etc. etc., and Commissioner of Income Tax (CNTL), Ludhiana Vs. Hero Cycles Pvt. Ltd., Ludhiana, we deem it unnecessary to state the facts, except to note that weighted deduction u/s 35B of the Act was claimed by the assessed on the interest paid by her on packing credit. The CIT(A) and the Tribunal, relying on the decision of the Bombay Bench of the Tribunal in Aaydee Corporation, Bombay v. ITO (ITA No. 393/Bom/80), held that the assessed was entitled to the relief claimed under the said section.

In the said judgments, it has been held that the expenditure which qualifies for deduction u/s 35B(1)(b)(iii) will have to be expenditure incurred outside India in connection with distribution, supply or provision outside India of such goods, services or facilities. No deduction u/s 35B can be allowed to the assessed for expenditure incurred in India in connection with the sale of goods. In the present case, as noted above, there is no dispute that the expenditure in the form of interest to the bank was incurred in India.

Following the ratio of the said authoritative pronouncements, the question referred is answered in the negative i.e., in favor of the Revenue and against the assessed.

The reference stands disposed of accordingly with no order as to costs.