Hamosons Export (P.) Ltd. vs Commissioner of Income Tax Commissioner of Income Tax Vs Hamosons Export (P.) Ltd.

N.V. Balasubramanian, J.—The common question of law, at the instance of the assessee for the assessment years 1978-79 and 1979-80,

referred by the Appellate Tribunal for our consideration reads as under :

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal has rightly held that the assessee is not entitled to

weighted deduction u/s 35B of the Income Tax Act, 1961, in respect of the following expenditure ?

SI No. Nature of expenditure Assessment year Assessment year

1978-79 1979-80

(1) Shipping and harbouring charges 67,238 --

(2) Export air freight charges 10,75,188 9,61,750

(3) Insurance charges 1,816 3,303

(4) Export handling charges -- 10,298

In so far as items Nos. 2 and 3, export air freight charges and insurance charges are concerned, Mr. Janarthana Raja, learned counsel for the

assessee, fairly submitted that the issue raised in the question is covered against the assessee by the decision of this court in the assessee''s own

case for the earlier assessment year in T. C. No. 190 of 1983 dated February 9, 1985, wherein it was held that the assessee was not entitled to

claim weighted deduction u/s 35B(1)(b) of the Income Tax Act, 1961, in respect of export air freight charges and insurance charges and following

the said judgment, we hold that the assessee is not entitled to claim weighted deduction on air freight charges and insurance charges and further the

assessee is also not eligible to claim weighted deduction on the expenditure incurred in India in view of the express prohibition under Sub-clause

(iii) of Section 35B(1)(b) of the Act.

As regards the other two items, namely, shipping and harbouring charges and export handling charges, we are of the opinion that the earlier

decision of this court in T. C. No. 190 of 1983, would also apply as the prohibition contained in Sub-clause (iii) of Section 35B(1)(b) of the Act

would equally apply to the shipping and harbouring charges and export handling charges as those charges were incurred in India and those charges

related to the carriage of such goods to a destination outside India or the insurance of such goods while in transit. Accordingly, we are of the

opinion that those expenditure would also come within the prohibitory clause contained in Sub-clause (iii) of Section 35B(1)(b) of the Act and,

consequently, the assessee is not entitled to claim weighted deduction with reference to any of the items Nos. 1 to 4 referred to in the question of

law.

Accordingly, we answer the common question of law referred to us in the affirmative and against the assessee. The Revenue is entitled to costs

of Rs. 750.