LUCAS TVS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE questions referred for our decision at the instance of the assessee in respect of the assessment of its income for the assessment year 1978-79 are :

(2.) WHETHER the Tribunal was right in holding that while arriving at the ceiling under Section 40(c) the reimbursement of the medical expenses should be taken into account ?"

(3.) LEARNED counsel, in support of his submission, placed reliance on the judgment of the Division Bench of the High Court of Calcutta in the case of Union Carbide India Ltd. v. CIT [1987] 165 ITR 558, wherein it was held that export agency inspection fees and fees paid for obtaining certificate as to the quality of the goods amounted to technical information on the quality of the products sought to be exported, and as the production of such certificate was essential for the saleability of the goods in the foreign market, such expenditure even though incurred in India was eligible for weighted deduction. Having gone through the judgment, with great respect, we are unable to concur with the view that export inspection agency fee paid in India for the inspection of goods actually exported by way of sale, is eligible for consideration under Section 35B of the Act. We are also unable to subscribe to the view that the expenditure incurred on account of the certificate of origin given in India is eligible for weighted deduction under Section 35B of the Act. As pointed out earlier, Section 35B of the Act is only concerned with the expenditure incurred by an assessee on development of the export market and not with the actual sale of the goods or with particular sales. This is evident from a perusal of the various sub-clauses of Section 35B(1)(b) of the Act, which, inter alia, refer to publicity outside India in respect of the goods, obtaining information regarding markets outside India for such goods, the expenditure incurred on distribution, supply or provision outside India of such goods or facilities, maintenance outside India of a branch office or agency, preparation and submission of tenders, furnishing of samples and technical information, travelling outside India and performance of services outside India which are incidental to the execution of the contract for the supply outside India of such goods. Export inspection agency fee as also the expenditure incurred on obtaining certificates of origin cannot be brought under any of the heads mentioned in Section 35B of the Act. Had this expenditure been incurred outside India, the assessee would have been eligible to claim the same under Section 35B(1)(b)(iii) of the Act, if it related to the distribution or supply of goods outside India.