Commissioner of Income Tax vs Vajid Sons (P) Ltd.

This is the reference u/s 256(2) of the Income Tax Act in which the following question has been referred to us for our opinion :

"Whether on the facts and in the circumstances of the case the Tribunal was right in law in upholding Appellate Assistant Commissioners order allowing weighted deduction u/s 35B of the Act on salary to others, salary to directors, rent and postages, telegrams and trunk calls ?"

Heard the learned counsel for the parties.

Learned counsel for the department has relied on the decision of the Division Bench Commissioner of Income Tax Vs. Noor Handicrafts, in which this court has held that it was not correct on the part of the Tribunal to allow the claim for weighted deduction u/s 35B of the Income Tax Act on the expenditure incurred on salaries, stationery, rent and postage without examining the nature of each item of expenditure and considering whether the claim fell under any one or more of the clauses of section 35B(1)(b) of the Income Tax Act, 1961. A perusal of paragraph 3 of the order of the Appellate Assistant Commissioner shows that the said authority has considered these claims. They have also been considered in paragraph 6 of the assessment order passed by the Income Tax Officer in detail.

Since the Tribunal has only affirmed the order of the lower authorities and passed an order of affirmation in our opinion even if the Tribunal has not considered the assessees claim in respect of each of the item u/s 35B of the Act there is no infirmity in the Tribunals order because the lower authorities have considered these matters, hence we are of the opinion that the decision in Noor Handicrafts (supra) is distinguishable.

Accordingly we decide the reference in the affirmative, i.e., in favour of the assessee and against the department.