JUDGMENT
1. The Income-tax Appellate Tribunal, Delhi Bench "B", Delhi, has, in compliance with the direction of this court, under Section 256(2) of the Income-tax Act, 1961, referred the following question stated to be of law and to arise out of the Tribunal's order dated May 1, 1980, passed in I. T. A. No. 1024(Delhi) of 1979, for the assessment year 1977-78, for the opinion of this court : "Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in allowing weighted deduction under Section 35B on the expenditure incurred on salaries, stationery, rent and postage ?"
2. We have heard Sri Shambhu Chopra, learned counsel for the Commissiorier, and Sri P. K. Misra, advocate, holding brief for Sri Bharat fi Agarwal, learned counsel for the respondent.
3. The assessee is an exporter of brassware and claimed export markets development allowance under Section 35B of the Income-tax Act, 1961, in respect of the expenditure to be detailed hereafter. The expenditure in respect of which such allowances, popularly known as weighted deduction is allowable, is mentioned under Section 35B(1)(b) as under :
"(b) The expenditure referred to in Clause (a) is that incurred wholly and exclusively on-
(i) advertisement or publicity outside India in respect of the goods, services or facilities which the assessee deals in or provides in the course of his business ;
(ii) obtaining information regarding markets outside India for such goods, services or facilities ;
(iii) distribution, supply or provision outside India of such goods, services or facilities, not being expenditure incurred in India in connection therewith or expenditure (wherever incurred) on the carriage of such goods to their destination outside India or on the insurance of such goods while in transit ;
(iv) maintenance outside India of a branch, office or agency for the promotion of the sale outside India of such goods, services or facilities ;
(v) preparation and submission of tenders for the supply or provision outside India of such goods, services or facilities, and activities incidental thereto ;
(vi) furnishing to a person outside India samples or technical information for the promotion of the sale of such goods, services or facilities ;
(vii) travelling outside India for the promotion of the sale outside India of such goods, services or facilities, including travelling outward from, and return to, India ;
(viii) performance of services outside India in connection with, or incidental to, the execution of any contract for the supply outside India of such goods, services or facility ;
(ix) such other activities for the promotion of the sale outside India of such goods, services or facilities as may be prescribed."
4. The Tribunal's order is brief and is as under :
"4. The only other ground relates to the claim of the assessee for weighted deduction under Section 35B of the Income-tax Act. The assessee had claimed weighted deduction on the following amounts :
Rs.
Miscellaneous expenses 18,551 (2) Salaries 58,158 (3) Foreign travel expenses 25,972 (4) Stationery 7,762 (5) Rent 4,300 (6) Postage 14,727 (7) Interest 61,812 (8) Export promotion commission 54,138
5. The scope of Section 35B and the extent to which weighted deduction can be given under that section in respect of various items of expenditure was considered by a Special Bench of this Tribunal in ITA Nos. 3255 and 3330/Bom of 1976-77 by its order dated, June 17, 1978. The same question in respect of weighted deduction claimed on certain items of expenditure by the assessee for the assessment year 1976-77 was considered by the Delhi Bench "B" of this Tribunal by its order dated June 7, 1979, in I.T.A. No. 2437/Delhi of 1977-78.
6. We may add here that the business activity of the assessee consists of purchasing brasswares from small scale manufacturers and polishing and packing the same and thereafter exporting it.
7. Out of the various items on which the weighted deduction was claimed by the assessee in respect of the amount of Rs. 25,972 on foreign travel expenses, the Income-tax Officer allowed weighted deduction at Rs. 22,972. He disallowed Rs. 3,000 on the ground that it represented the personal expenses of the partners. We do not intend to disturb this part of the order of the Income-tax Officer. So far as export promotion commission (item No. 8 above) is concerned, the weighted deduction on whole of the amount has been allowed by the order of the Appellate Assistant Commissioner. So far as other items of expenditure are concerned, having regard to the decision of the Special Bench and of the Delhi Bench "B" of this Tribunal referred to above and the submissions of learned counsel for the assessee and the learned Departmental Representative and the nature of the business activity of the assessee our order is as follows :
Head of expenditure Amount (Rs.) Weighted deduction
1. Salaries 58,158 50 per cent. having regard to the fact that it is not clear that the salaries shown has not been shown to be only salaries of the export promotion staff.
2. Stationery 7,762 50 per cent.
3. Rent 4,300 50 per cent.
4. Postage 14,727 75 per cent.
We are of the view that the assessee is not entitled to weighted deduction under Section 35B on miscellaneous expenses and on interest paid by it."
5. As is evident, the Tribunal while allowing the weighted deduction on the aforesaid four items, has not recorded any finding of fact to bring the case within any one or more of the nine categories mentioned above. Without finding that the expenditure was incurred wholly and exclusively on one or more of the categories mentioned in the aforesaid clause, the Tribunal could not have allowed the assessee's claim.
6. We, therefore, answer the aforesaid question in the negative holding that without examining the nature of each item of expenditure and without finding that it falls under any one or more of the aforesaid clauses, the Tribunal was not correct in allowing the weighted deduction under Section 35B on the expenditure incurred on salaries, stationery and rent.
7. An authenticated copy of the judgment be sent to the Appellate Tribunal in accordance with law.