IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITR Nos.30 and 31 of 1992 Date of decision: 16.7.2010 The Commissioner of Income Tax, Haryana Rohtak -----Petitioner Vs. M/s Mahajan International, Panipat ----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE ALOK SINGH Present:- Mr. Sukant Gupta, Advocate for the revenue. Mr. S.K.Mukhi, Advocate with Ms. Jyoti, Advocate for the assessee. Adarsh Kumar Goel,J. 1. The Income Tax Appellate Tribunal, Delhi Bench ‘C’, New Delhi has referred for opinion of this Court following question of law under section 256(2) of the Income Tax Act, 1961 (for short, ‘the Act’) in pursuance of direction of this Court, arising out of order of the Tribunal dated 31.1.1984 in ITA Nos.667 and 8 (CHANDI)/1982, for the assessment years 1977-78 and 1977-78:- “Whether on the facts and in the circumstances of the case, the Appellate Tribunal has been right in law in allowing a further sum of Rs.27,383/- under section 35(b) of the Income Tax Act, 1961?” 2. The assessee is exporter of handloom items and claimed deduction under section 35B of the Act in respect of salary to the ITR Nos.30 and 31 of 1992 staff handling exports, rent of the office premises attributable to export, expenses on printing and stationery, telephone and telex, postage and stamps. The Assessing Officer rejected part of the claim on the ground that the same was not attributable to export and deduction could be allowed only in respect of expenditure exclusively for export. The Assessing Officer did not allow the said claim on the ground that they were not relatable exclusively to export. On appeal, claim of the assessee was partly allowed and the Tribunal gave further relief to the assessee. In respect of different expenses claimed, the findings of the Tribunal are as under:- “i) Regarding salary to staff handling exports there is no controversy about the fact that the amount of Rs.58,500/- was exclusively in respect of salary meant for the export staff. As per principles laid down in Special Bench decision and since there has been no controversy about the fact that the amount of Rs.58,500/- was on account of salary of staff handling export business, assessee’s claim ought to have been accepted to the extent of 75% of the total amount. In other words assessee’s claim is admitted to the tune of Rs.43,875/- against Rs.5750/- allowed by the Commissioner of Income tax (Appeals). ii) Coming to rent of office premises which as a whole is attributable to export office, as per principles laid down by the Special Bench, the assessee’s claim is allowed on 50% of Rs.24,905/-. In other words, assessee is entitled to weighted deduction on Rs.12,452/- as against on a sum of 2 ITR Nos.30 and 31 of 1992 Rs.2000/- in respect of which the assessee’s claim has been allowed by the Commissioner of Income tax (Appeals). iii) Coming to printing and stationery, telephone and telex, postage and telegram, ordinarily as per principles laid down by Special Bench, the assessee’s claim in respect of foreign telex and telephone and telegrams is to be allowed in toto whereas no weighted deduction is admissible in respect of local telex and telephones and telegrams. In case, however, details are not specifically available as in the instant case, out of the total claim of Rs.1,32,031/- the assessee is entitled to weighted deduction on 50% of the total expenses. In other words, assessee’s claim is directed to be allowed only on a sum of Rs.66,015/- because it has not been the case of the assessee that the entire expenses are only in respect of exports as stated earlier in respect of two items of salary and rent. The Commissioner of Income Tax (Appeals) in his order has accepted the claim only on Rs.30,000/- against which we have allowed it on a sum of Rs.66,015/-.” 3. We have heard learned counsel. It has been pointed out that Section 35 (b) in the question appears to be a mistake for 35B (1)(b). 4. Learned counsel for the revenue submitted that there is incorrect assumption in the order of the Tribunal in para 14 to the 3 ITR Nos.30 and 31 of 1992 effect that the assessee was running the business of vegetables while the business of the assessee was of handlooms. He further submitted that expenses claimed were not covered by Section 35B (1)(b). 5. We are unable to accept the submission. As regards wrong assumption as to nature of business of the assessee, it is not this assumption which is the basis of the order of the Tribunal in allowing the claim of the assessee for weighted deduction under section 35B of the Act. The basis of order of the Tribunal is that the expenses were relatable exclusively to export. The finding that the expenses were relatable to export is not shown, in any manner to be perverse. If the expenses are relatable to export only, deduction under section 35B of the Act could not be objected. 6. Accordingly, the question referred is answered against the revenue and in favour of the assessee. 7. Both the references are disposed of. (Adarsh Kumar Goel) Judge July 16, 2010 ( Alok Singh) ‘gs’ Judge 4 ITR Nos.30 and 31 of 1992 5