LexCOMMISSIONER OF INCOME TAX, DELHI versus STEPWELL INDUSTRIES LTD. ETC. ETC.
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A COMMISSIONER OF INCOME TAX, DELHI v. STEPWELL INDUSTRIES LTD. ETC. ETC. AUGUST 27, 1997 B [SUHAS C. SEN AND SAGHIR AHMAD, JJ.] Income Tax Act, 1961. S. 35B(l)(b)-Weighted deduction-Held, in order to get the deduction, C onus lies 011 assessee to establish that expenditure falls within any of the purposes set out in various sub-clauses of Clause (b) of s. 35-B(J)-Merely becau~e some activities took place outside India or some expenditure was incu"ed in India, it will not qualify the expenditure for deductions mentioned in the section-No expenditure can be allowed under s.35B generally-Asses- see should place the particulars before I. T. 0. or Appellate CommissioneHf D asses see fails to do this, he cannot get the deduction-Nor can the Tribunal allow the claim on assumption of facts. E F G Addi. Commissioner of Income Tax Gujarat v. GuTjargravures Pvt. Ltd., 111 I.T.R. 1, relied on. CIVIL APPELLATE JURJSDJCTION : Civil Appeal No. 1275 of 1992 Etc. Etc. From the Judgment and Order dated 29.11.91 of the Delhi High Court in l.T.C. No. 24 of 1991. T.V.L. Iyer, G.C. Sharma, Ms. Renu George, B.K. Prasad, H.K. Puri, Rajesh Srivastava, Ujjwal Banerjee, Vineet Kumar, Ms. Janki Ramachandran, S. Ganesh, K.J. John, Ms. Manju Mishra, B. Kanta Rao, K. Janjani and K.L. J anani for the appearing parties. The following Order of the Court was, delivered : The following question of law came up for consideration before the High Court under Section 256 (2) Income Tax Act, 1961 : "Whether, on the facts and in the circumstances of the case, the H I.T .A.T. was correct in law in holding that the assessee was entitled 580 - C.I.T. DELHI v. STEPWELL INDUSTRIES LTD. 581 to weighted deduction u/s 35B of the Income Tax Act, 1961 in A respect of commission payment of Rs. 1,46,678?" The High Court declined to entertain this question. Hence this appeal to this Court. · The assessee's goods were sold by the State Trading Corporation of India Limited to various parties outside India. The assessee claimed weighted deduction under Section 35B(l)(b)(i) and (iv). The claim of the assessee is not admissible on these facts. The weighted deduction is allowed B for activities carried out wholly and exclusively on the various purposes set C out in sub-clauses (i) (ii), (v) (vii) (viii) and (ix) of Section 35B(l)(b). Section 35B allowed at the material time deduction of a sum equal to one and one third times of the amount of such exenditure incurred during the previous year. In order to get this kind of deduction, the onus lies heavily on the assessee to prove that the expenditure falls within any of the D purposes set out in various sub-clauses of Clause (b) of Section 35B(l). Merely because some activities took place outside India will not qualify the expenditure for th.e deductions mentioned in Section 35(B). If the State Trading Corporation incurs expenditure for an advertisement or publicity outside India, the assessee will not be entitled to any deduction unless the assessee can establish that the advertisement or publicity was being done E outside Inida for and on behalf of the assessee and in respect of goods the assessee deals in or provides in course of his business. Likewise, if the State Trading Corporation maintains a branch officer or agency for the promotion of sale outside Inida, the assessee cannot claim any deduction on account of maintenance of such branch office or agency but if such F branch office or agency is maintained by the assessee himself for the· promotion of sale outside India of his goods, services or facilities, then the assessee will be entitled to a deduction under Section 35B. We are of the view that the High Court should have called for a G reference of this question. However, at this stage, there is no point in sending the case back to the High Court. We treat the reference as to have. been made to this Court and .answer the question in the negative and in favour of the Revenue. There will be no order as to costs. The appeal is allowed. H 582 SUPREME COURT REPORTS [1997] SUPP. 3 S.C.R. A CIVIL APPEAL NO. 3280/1995 B The following question of law was sought to be referred to the High Court: "Whether on the facts and in the circumstances o_f the case, the Appellate Tribunal was right in law in holding that the amount of Rs. 3,10,750 paid as commission to M/s. Singh and Co. and HREC is entitled to weighted deduction under Section 35B(l)(b) of t
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