Om Prakash, CJ At the instance of the revenue, the Tribunal referred the following questions for the opinion of this Court: "Questions in R.A. Nos. 316 & 317 (Coch.) of 1991:
Whether, on the facts and in the circumstances of the case and also in view of the fact that Explanation 2 was operative with effect from 1-4-1968 to 31-3-1981, the assessee is eligible for weighted deduction under section 35B of the Income-tax Act for the assessment years 1977-78 and 1978-79 ?
Question in R.A. No. 5:
Whether, on the facts and in the circumstances of the case and on an interpretation of the relevant provisions and also in the light of the decisions in CIT v. Southern Sea Foods (P) Ltd. [1983] 140 ITR 855/12 Taxman67(Mad.); CIT v. C. Tharian & Sons [1987] 166 ITR 607 (Ker.) and CIT v. K Ravindranathan Nair [1988] 170 ITR 411 (Ker.), the Tribunal is right in law and fact in holding,-
(i) the expenses incurred, namely, agency fees paid to foreign agents will fall under section 35B(I)(b)(ii);
(ii) the expenses incurred, namely, to Indian agents will fall under section 35B(I)(b)(ii);
(iii) the commission paid for canvassing agency will fall under sub-clause (viii) of clause (b) of section 35B(1);
(iv) communication expenses incurred by the agent abroad win under section 35B(I)(b)(it); and in allowing the same;
(v) communication expenses (four items) incurred in India will be allowed for deductions at 50% of them ?
Question in R. A. Nos. 306 to 309 and 310 & 311:
1. Whether, on the facts and in the circumstances of the case Tribunal is right in law and fact in holding that the agency fees to the foreign agents and Indian agents is an allowable expenditure for weighted deduction in terms of sub-clause (ii) of clause (b) of section (1) of section 35B ?
Question in R.A. No. 6:
Whether, on the facts and in the circumstances of the case and on an interpretation of the relevant provisions and also in the light of the decisions in CIT v. Southern Sea Foods (P.) Ltd. [1983] 140 ITR 855 /12 Taxman 67 (Mad.); CIT v. C. Tharian & Sons [1987] 166 ITR 607 (Ker.) and CIT v. K. Ravindranathan Nair [1988] 170 ITR 411 (Ker.), the Tribunal is right in law and fact in holding that the assessee would be entitled to weighted deduction-
(i) agency fee paid;
(ii) commission paid to Indian agents;
(iii) foreign expenses and communication expenses incurred by foreign agents;
(iv) communication expenses of Indian agents and other four items of expenditure at 50% of them ?"
2. The order of the Tribunal is Annexure C, which was later rectified by orders Annexure D and Annexure E. Upon perusal of the orders of the Tribunal, it is clear that the Tribunal has not taken into consideration the various clauses of section 35B of the Income-tax Act, 1961 and without discussing the case of the assessee threadbare, it just accepted the claim of the assessee.
3.1n CIT v. Stepwell Industries Ltd. [1997] 228 ITR 171/94 Taxman 280, the Supreme Court in respect of the claim made under the same provision held as under:
ln order to get this deduction, the assssee will have to prove that the expenditure was incurred during the previous year wholly and exclusively for the purposes set out in clause (b) of section 3513(1)(b). There cannot be any blanket allowance of the expenditure nor can there be any blanket disallowance. Every case has to be discussed specifically and the expenditure must be found to be of the nature mentioned in any one of the sub-clauses. If the expenditure does not fall in any of these categories, it cannot be allowed as a deduction.... Every case will have to be examined in the light of the provisions of the sub-clauses and the facts proved by the assessec." (p. 175)
4. The Supreme Court also observed that the onus is on the assessee to prove that he is entitled to get the deduction allowed under section 35B. As relevant clauses of section 35B were not discussed and considered by the High Court, the judgment of the High Court and also the order of the Tribunal was set aside and the case was remanded back to the Tribunal.
5. The position in the case at hand is no better than that of Stepwell Industries Ltd. Following the aforesaid authority, we set aside the order of the Tribunal and remand the case back to the Tribunal, who will record findings on all the questions afresh, taking into consideration all the relevant clauses of section 35B after giving opportunity of being heard to the parties.