Agrimmoor P. Ltd. vs Commissioner of Income Tax

N. V. Balasubramanian , J.—The question of law referred at the instance of the assessee for the assessment years 1976-77 and 1977-78

reads as under:

Whether the Tribunal was justified in confirming the disallowance of expenditure incurred on Agmark coupons, fumigation charges, carriage of

export goods, marine insurance and certificate of origin under the provisions of Section 35B of the Income Tax Act, 1961, for the assessment year

1978-79 ?

A bare reading of the question would indicate that the claim of the assessee is u/s 35B of the Income Tax Act, 1961, for weighted deduction in

respect of certain items of expenditure set out in the question. We are of the opinion that so far as Agmark expenses are concerned, it cannot be

said that it was incurred exclusively for the purpose of submitting technical information to the foreign buyers for promoting export sales of the

assessee.

The Andhra Pradesh High Court in Commissioner of Income Tax Vs. Navabharat Enterprises (P.) Ltd., , has taken a view that weighted

deduction in respect of Agmark expenses is not allowable u/s 35B of the Income Tax Act. We are in respectful agreement with a view expressed

by the Andhra Pradesh High Court and hold that the expenses incurred by the assessee in respect of Agmark cannot be said to have been incurred

either for promotion of export sales or for the purpose of furnishing technical information to foreign buyers and the case of the assessee does not

fall u/s 35B(1)(b)(viii) of the Act and, therefore, the assessee is not entitled to weighted deduction in respect of the expenses incurred in Agmark.

So far as the other items, namely, fumigation charges, carriage of export goods, marine insurance and certificate of origin, are concerned we are

of the opinion that the claim of the assessee Would fall u/s 35B(1)(b)(iii) of the Act since they are expenses incurred for the carriage of the goods

in India and, therefore, the assessee is not entitled to claim the weighted deduction u/s 35B of the Act. We are of the opinion that the Tribunal was

correct in holding that the assessee is not entitled to weighted deduction for any of the expenditure covered in the question of law referred to us.

Accordingly, the question of law referred to us, is answered in the affirmative and against the assessee. But, however, in the circumstances of the

case, there will be no order as to costs.