Commissioner Of Income Tax vs Smt. Sudesh Madhok
2002 Latest Caselaw 2067 Del

JUDGMENT

D.K. Jain, J.

1. At the instance of the Revenue, Tribunal, New Delhi, has referred under Section 256(1) of the IT Act, 1961 (for short the Act), the following question for our opinion :

"Whether, on the facts and in the circumstances of the case, the assessed is entitled to weighted deduction under Section 35B of the IT Act, 1961, in respect of the interest payment of Rs. 2,55,657 made to the Bank of Maharashtra on packing credit ?"

2. Since in our opinion answer to the question referred stands concluded by the decisions of the apex Court in CIT v. Stepwell Industries Ltd. and Ors. (1997) 228 ITR 171 (SC) and CIT v. Hero Cycles (P) Ltd. and Ors. (1997) 228 ITR 463 (SC), we deem it unnecessary to state the facts, except to note that weighted deduction under Section 35B of the Act was claimed by the assessed on the interest paid by her on packing credit. The CIT(A) and the Tribunal, relying on the decision of the Bombay Bench of the Tribunal in Aaydee Corporation, Bombay v. ITO (ITA No. 393/Bom/80), held that the assessed was entitled to the relief claimed under the said section.

3. In the said judgments, it has been held that the expenditure which qualifies for deduction under Section 35B(1)(b)(iii) will have to be expenditure incurred outside India in connection with distribution, supply or provision outside India of such goods, services or facilities. No deduction under Section 35B can be allowed to the assessed for expenditure incurred in India in connection with the sale of goods. In the present case, as noted above, there is no dispute that the expenditure in the form of interest to the bank was incurred in India.

Following the ratio of the said authoritative pronouncements, the question referred is answered in the negative i.e., in favor of the Revenue and against the assessed.

The reference stands disposed of accordingly with no order as to costs.