COMMISSIONER OF INCOME TAX Vs. TRADE WINGS LIMITED

JUDGEMENT

(1.) THE assessee carries on the business of travel agents and conducts and makes arrangements for tours in India for foreign tourists including reservation and booking of accommodation by railway, air, etc. It is also said to have a net work of a large number of agents in foreign countries to publicise its services and to canvass customers therefor and, for these and other purposes, it is necessary for the executives of the assessee to undertake foreign travel involving substantial expenditure thereon. For the assessment year 1972 -73, the assessee -company had claimed weighted deduction under section 35B of the Act in respect of an amount of Rs. 58,408, which represented foreign travel expenses including cost of gift articles distributed to foreign travel agents abroad, cost of travel folders for distribution abroad and membership subscription of certain travel association. The claim of the assessee was allowed by the Income -tax Officer (the 'Income -tax Officer').

(2.) THE Commissioner of Income -tax (the 'Commissioner'), however, called for the assessment records of the assessee for the year in question and, on a perusal of the same, felt that the Income -tax Officer had erroneously allowed deduction under section 35B on the above items of expenditure. A notice under section 263 of the Act was, therefore, issued to the assessee asking it to show cause why the order of the Income -tax Officer should not be considered to be erroneous and prejudicial to the interests of the Revenue and why an order should not be passed suitably modifying the assessment order passed by the Income -tax Officer. The assessee showed cause, vide its letter dated September 10, 1976, justifying the order of the Income -tax Officer. The Commissioner, however, was not satisfied with the contention of the assessee. According to him 'the Income -tax Officer had allowed weighted deduction under section 35B without investigating the facts stated in the return, when the circumstances were such as to make such an enquiry prudent'. He, therefore, set aside the order of the Income -tax Officer with a direction to redo the assessment afresh in accordance with law after giving the assessee an opportunity of being heard.

(3.) THE Tribunal agreed to make a reference and prepared a draft statement of the case. When the draft statement was taken up for finalisation, the Tribunal felt that the second question was not a question of law. This is evident from the following observations of the Tribunal in the concluding part of statement of the case :