The Commissioner Of Income Tax, Haryana Rohtak v. M/S Mahajan International, Panipat

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. 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 GOELHON’BLE MR. JUSTICE ALOK SINGH Present:-Mr. Sukant Gupta, Advocate for the revenue. Mr. S.K.Mukhi, Advocatewith 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 followingquestion of law under section 256(2) of the Income Tax Act, 1961(for short, ‘the Act’) in pursuance of direction of this Court, arisingout 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 ofthe case, the Appellate Tribunal has been right inlaw in allowing a further sum of Rs.27,383/- undersection 35(b) of the Income Tax Act, 1961?” 2.The assessee is exporter of handloom items and claimeddeduction under section 35B of the Act in respect of salary to the staff handling exports, rent of the office premises attributable toexport, expenses on printing and stationery, telephone and telex,postage and stamps. The Assessing Officer rejected part of theclaim on the ground that the same was not attributable to exportand deduction could be allowed only in respect of expenditureexclusively for export. The Assessing Officer did not allow thesaid claim on the ground that they were not relatable exclusively toexport. On appeal, claim of the assessee was partly allowed and theTribunal gave further relief to the assessee. In respect of differentexpenses claimed, the findings of the Tribunal are as under:- “i) Regarding salary to staff handling exports thereis no controversy about the fact that the amount ofRs.58,500/- was exclusively in respect of salarymeant for the export staff. As per principles laiddown in Special Bench decision and since there hasbeen no controversy about the fact that the amountof Rs.58,500/- was on account of salary of staffhandling export business, assessee’s claim ought tohave been accepted to the extent of 75% of the totalamount. In other words assessee’s claim is admittedto the tune of Rs.43,875/- against Rs.5750/- allowedby the Commissioner of Income tax (Appeals). ii) Coming to rent of office premises which as awhole is attributable to export office, as perprinciples laid down by the Special Bench, theassessee’s claim is allowed on 50% of Rs.24,905/-.In other words, assessee is entitled to weighteddeduction on Rs.12,452/- as against on a sum of Rs.2000/- in respect of which the assessee’s claimhas been allowed by the Commissioner of Incometax (Appeals). iii) Coming to printing and stationery, telephone andtelex, postage and telegram, ordinarily as perprinciples laid down by Special Bench, theassessee’s claim in respect of foreign telex andtelephone and telegrams is to be allowed in totowhereas no weighted deduction is admissible inrespect of local telex and telephones and telegrams.In case, however, details are not specificallyavailable as in the instant case, out of the total claimof Rs.1,32,031/- the assessee is entitled to weighteddeduction on 50% of the total expenses. In otherwords, assessee’s claim is directed to be allowedonly on a sum of Rs.66,015/- because it has not beenthe case of the assessee that the entire expenses areonly in respect of exports as stated earlier in respectof two items of salary and rent. The Commissionerof Income Tax (Appeals) in his order has acceptedthe claim only on Rs.30,000/- against which wehave 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 isincorrect assumption in the order of the Tribunal in para 14 to the 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 isincorrect assumption in the order of the Tribunal in para 14 to the effect that the assessee was running the business of vegetableswhile the business of the assessee was of handlooms. He furthersubmitted that expenses claimed were not covered by Section 35B(1)(b).5. We are unable to accept the submission. As regardswrong assumption as to nature of business of the assessee, it is notthis assumption which is the basis of the order of the Tribunal inallowing the claim of the assessee for weighted deduction undersection 35B of the Act. The basis of order of the Tribunal is thatthe expenses were relatable exclusively to export. The finding thatthe expenses were relatable to export is not shown, in any mannerto 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 againstthe revenue and in favour of the assessee. 7.Both the references are disposed of. (Adarsh Kumar Goel) Judge July 16, 2010‘gs’ ( Alok Singh) Judge