SONAL GUM INDUSTRIES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income -tax Appellate Tribunal ('the Tribunal' for short) has referred to us, for our opinion, the following questions, under section 256(1) of the Income -tax Act, 1961 ('the Act' for short) :

(2.) IN our opinion, question No. 1 clearly brings out the controversy involved n this reference and questions Nos. 2 AND 3 are mere repetitions of question No. 1 in a different form. Question No. 3, as framed, is misleading, inasmuch as the Tribunal has not take the view to the effect that the assessee is not entitled to 100% deduction on all other items of expenditure except those referred to in the precedig question. What the Tribunal has held is that the assessee is not entitled to full relief, as provided in section 35B of the Act, on the items of expenditure as claimed by the assessee. This controversy is clearly brought out in question Nos. 1 to deduction of 100% of the expenditure whic is revenue expenditure. The only question raised is wheter the assessee is entitled to relief under section 35B of the Act. In our opinion, therefore, it was not necessary to refer to us, for our opinion, questions Nos. 2 and 3, and in any case, question No. 3.

(3.) THE items of expenditure in respect of which the assessee has not been granted relief under section 35B of the Act are incurred in India and, since these items of expenditure, to the extent the assessee claimed is disallowed, fall under sub -clause (iii) o0f clause (b) of section 35B(1) of the Act, the assessee is not entitled to any relief, as rightly held by the Tribunal. Twenty -five percent. of the expenditure incurred in paying salary to the staff would fall under the said sub -clause (iii) and that expenditure, having been incurred in India does not qualify for relief under section 35B(1)(a). The remaining items of expenditure also fall under sub -clause (iii) and they having been incurred in India, do not qualify for the relief under section 35B(1)(a). It may be pointed out that, in the appeals before the Tribunal also, learned counsel for the assessee fairly conceded that the assessee was not entitled to claim relief under section 35B except in respect of three items of expenditure, namely, (1) telegram charges (foreign), (2) telephone charges (foreign), and (3) telex charges (foreign). So far as remaining items of expenditure are concerned, the assessee's claim was not seriously pressed. In view of the concession made by learned counsel for the assessee, the assessee is not entitled to claim weighted deduction in respect of the items of expenditure other than those in respect of which the assessee's claim has been allowed.