GOKULDAS EXPORTS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN these two references under section 256(1) of the INcome-tax Act, 1961 (for short "the Act"), the common question referred for out consideration reads thus :

(2.) THESE references are in respect of the assessment years 1882-83 and 1981-82, respectively. The statement of the case referred to us states that the assessee is a firm carrying on the business of sale of ready-made garments. To promote export trade, the assessee had sent samples abroad. The samples had been sent for the sake of advertisement, which involved certain expenditure.

(3.) THE fact that the samples were sent abroad, to promote export trade and for the sake of advertisement, is not disputed because that is the very basis of the reference stated in the statement of the case. THE Appellate Tribunal also, in its order at paragraph 3, states that the samples would appear to have been sent for the sake of advertisement. THErefore, if the sending of the samples is for the purpose of advertisement, can it be said that the said advertisement was not covered by sub-clause (i) at all. THE subjects covered by the provisions of section 35B are quite wide. Under several sub-clause, provisions are made for giving weighted deduction obviously to encourage exports from India. In the case of a business transaction, an item of transaction cannot be always identified by a particular nomenclature. It is quite possible that a particular transaction may admit of more than one description. For example, a manufacturer in India may invite representative of the traders from abroad and in that regard, expenditure may have to be incurred. THEse foreign invites not only would convey information regarding markets in their country, but also would gain their own impressions about the articles manufactured by the particular manufacturer, which, in turn, would cause publicity for the said articles outside India. This is a situation which will be covered both by sub-clause (i) and sub-clause (ii) of section 35B(1)(b). Similarly, under sub-clause (v), activities incidental to the main activity of preparation and submission of tenders, etc., necessarily the requisite information shall have to be obtained. This is a situation which can be brought within sub-clause (ii) and sub-clause (v)