COMMISSIONER OF INCOME-TAX Vs. BANK OF INDIA

JUDGEMENT

(1.) The appeal by the Revenue is in respect of the assessment year 1981-82. The question of law as formulated in para 5 really pertains to weighted deduction.

(2.) With the above a few facts may now be set out. The Assessing Officer rejected the assessee's claim of deduction under Section 35B. The Commissioner of Income-tax (Appeals) accepted in principle that the assessee was entitled to deduction under Section 35B. The Assessing Officer thereafter made certain orders for giving effect to the order of the Commissioner of Income-tax (Appeals). Two appeals were preferred by the assessee in connection with the orders passed by the Assessing Officer to give effect to the earlier order of the Commissioner of Income-tax (Appeals).

(3.) In the appeal before the Income-tax Appellate Tribunal the relevant facts have been narrated in paragraph 7. After considering the various contentions of the parties before it the learned Income-tax Appellate Tribunal in paragraph 11 in so far as expenditure on items such as municipal taxes, salary, provident fund, rent, tax, insurance, light and power expenses estimated it at 25 per cent, of the total expenses and arrived at a conclusion that it was at a lower side and that a higher proportion of expenditure should have been allowed for weighted deduction for the items aforestated other than salary and, therefore, held that these items would be eligible for weighted deduction to the extent of 50 per cent, of the expenses. The Tribunal concurred with the finding of the Commissioner of Income-tax (Appeals) that the salaries, allowances, provident fund contribution to the employees in overseas branches should be held eligible to the extent of 25 per cent. only. The Tribunal disagreed with the finding of the Commissioner of Income-tax (Appeals) that the entire law charges should not be treated as invested with the character of export market development expenses and directed that these expenses to the extent of 25 per cent, may be held as eligible for weighted deductions. It accepted the finding by the Commissioner of Income-tax (Appeals) in the matter of travelling expenses in foreign branches of 50 per cent. It, however, felt that in the matter of advertisement in foreign branches it should qualify for 100 per cent weighted deduction instead of 75 per cent, so treated by the Commissioner of Income-tax (Appeals). The various other weighted deductions are also stated therein. It is not necessary for us to reproduce the same. In the light of that the Assessing Officer was directed to recompute the weighted deductions to the assessee under Section 35B of the Income-tax Act in accordance with the Act for both the assessment years 1980-81 and 1981-82.