VIJAY KUMAR AGGARWAL Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THE following identical question of law has been referred by the Income-tax Appellate Tribunal (for short, "the Tribunal"), in all the three references (Income-tax Reference No. 139 of 1982 and Nos. 67 and 68 of 1983), at the instance of the assessee for the assessment years 1976-77, 1977-78 and 1978-79 :

(2.) THE assessee derived income from the manufacture and sale of cast iron, soil pipes and pipe fittings. The products were mostly exported by the assessee to the Middle-East countries. The facts arising from the order of the Tribunal relating to the assessment year 1976-77 shall be discussed hereunder. The return of income, originally filed for the assessment year 1976-77, showed income of Rs. 41,670. However, in the revised return, the assessee declared a loss of Rs. 10,60,653. The assessee claimed, in the revised return, deduction at an enhanced amount under Section 35b of the Income-tax Act, 1961 (for short "the Act" ). The Assessing Officer proposed additions exceeding Rs. 1,00,000 and he, therefore, forwarded a draft assessment order, to the assessee under Section 144b of the Act. The assessment was thereafter made making various additions and disallowances. The assessee had claimed weighted deduction under Section 35b of the Act in the original return on expenditure of Rs. 91,427 which represented one-third of the total expenditure amounting to Rs. 2,74,280. In the revised return, weighted deduction was claimed at Rs. 12,04,681 which was one-third of the expenses amounting to Rs. 36,14,065. The total expenditure this time included export expenses of Rs. 3,37,778 and bank commission of Rs. 13,033. The Assessing Officer allowed weighted deduction on commission paid to the foreign agents and on expenditure on foreign advertisements, foreign samples and foreign travelling only.

(3.) THE controversy raised by the assessee relates to identical items of expenses in all the three years as under : Year Sl. No. Expenditures 1976-77 1977-78 1978-79 (1) (2) (3) (4) (5) 1. Export expenses, namely, freight insurance, shipping port fees, packing materials, etc. 30,49,61 6 68,15,39 3 43,83,54 6 2. Export inspecting agency charges. 84,716 1,44,330 79,992 3. Bank commission 13,033 26,243 25,139