DAWN APPARELS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) UNDER S. 256(1) of the IT Act, 1961, the Tribunal has referred the following question at the instance of the assessee :

(2.) RELEVANT assessment year is 1976 77. The assessee manufactures wearing apparels. By a resolution dt. 30th June, 1972, the company decided to sell its entire output to the Dawn Mills Co. Ltd. There was no condition that the Mills should export the goods outside India. There was no material on record to indicate that the output sold by the assessee to the Dawn Mills Co. Ltd., was substantially diverted for export.

(3.) OUR attention was invited by the learned counsel for the assessee to the two decisions (i) CIT vs. C.R. Narayana Rao (1984) 146 ITR 310 (Mad) and (ii) Gokuldas Exports vs. CIT (1993) 200 ITR 401 (Kar), in support of a proposition that weighted deduction cannot be denied only because particular expenditure did not result in actual export. The legal position on that point is well settled. The Tribunal has taken note of it.