COMMISSIONER OF INCOME TAX Vs. N J ALBERT

JUDGEMENT

(1.) THIS reference at the instance of the Revenue arises from an order of the Income-tax Appellate Tribunal Cochin Bench in I. T. A. No. 376 (Coch.) of 1979. The relevant assessment year is 1978-79. The following question is referred for opinion of this court :

(2.) THE reference was originally answered by this court in the negative, i.e., in favour of the Revenue and against the assessee by judgment dated February 11, 1987, in the light of a decision of this court in I.T.R. Nos. 7 and 8 of 1982 CIT v. C. Tharian and Sons, 1987 166 ITR 607. THE matter was taken in appeal by the assessee before the Supreme Court. By order dated March 24, 1999, the Supreme Court remanded the matter for fresh consideration by this court with the following observations :

(3.) AFTER remand the matter has come up for hearing. We heard learned senior standing counsel for the Revenue and counsel for the assessee. The relevant facts of the case are as follows : The assessee is a firm deriving income by way of commission. It provides services to exporters in India by obtaining information regarding markets outside India for services and other facilities, furnishes to the non-resident customers outside India samples or technical information, thus promoting sale of goods and services. The assessee-firm itself does not export any goods. For the assessment year 1978-79, the assessee claimed weighted deduction under Section 35B of the Income-tax Act, 1961, in respect of a sum of Rs. 63,492.17 comprising the expenses incurred by way of samples, postage, cables, overseas trunk calls and foreign travelling expenses. The Income-tax Officer rejected the assessee's claim on the ground that the assessee is not an exporter and, therefore, not eligible for weighted deduction under Section 35B. On appeal by the assessee, the Commissioner of Income-tax (Appeals) held that expenses were incurred in connection with the assessee's business of rendering services of obtaining information from outside India and furnishing to non-resident customers samples and information regarding availability of materials and, therefore, the expenses were duly covered by Sub-clauses (ii), (vi) and (vii) of Section 55B(1)(b). The assessee's appeal was thus allowed.