WESTERN INDIA INDUSTRIES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee is a registered partnership firm running a solvent plant. It carries on the business of crushing oil cakes and producing solvent refined oil, de -oiled cakes, etc. It export de -oiled cakes. The assessee claimed weighted deduction under section 35B of the Income -tax Act, 1961 ('the Act', for short), in respect of the following items :

(2.) IN the assessment for the assessment year 1972 -73, the Income -tax Officer rejected the assessee's claim for weighted deduction in respect of the items set out above mainly on the ground that the expenditure was incurred in India and was not eligible deduction. For the assessment year 1973 -74, the Income -tax Officer rejected the claim of the assessee for weighted deduction on the ground firstly that the expenditure which was incurred by the assessee was in its ordinary course of business and as such did not fall for consideration under section 35B of the Act. He also held that the expenditure incurred for the payment on dalali, de -oiled cake, quota slip charges and analysis charges was incurred in India, and, therefore, the assessee's claim was not admissible. For the assessment year 1974 -75, the Income -tax Officer rejected the claim of the assessee for weighted deduction mainly on the ground that the expenditure incurred in India did not qualify for weighted deduction. For the assessment year 1975 -76, the Income -tax Officer rejected the claim of the assessee for weighted deduction for the same reasons as stated for the earlier years.

(3.) ON further appeal, the Tribunal found that the expenditure incurred by the assessee by way of dalali or brokerage would be eligible for weighted deduction in full as it was admittedly paid to various parties for bringing about the export sales. With regard to items like weight difference, quality allowance, quota slips and analysis charges, the Tribunal rejected the assessee's claim for weighted deduction and upheld the orders of the authorities below. Claim for godown rent for the assessment year 1974 -75 was also rejected by the Tribunal. As regards kharajat expenses, it upheld the Commissioner's view that the assessee was entitled to weighted deduction to the extent of 10 per cent. of the said expenses. In reaching this conclusion, the Tribunal followed the decision of a Special Bench. In the background of the above facts, the following question is referred to us for our opinion :