LexCOMMISSIONER OF INCOME TAX versus BOMBAY BURMAH TRADING CORPORATION
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COMMISSIONER OF INCOME TAX v. BOMBAY BURMAH TRADING CORPORATION FEBRUARY 15, 2000 !D.P. WADHWA AND S.S. MOHAMMED OUADRI, JJ.I Income-tax Act, 1961-Section 35-B-Export Markets developments al- lowance-Weighted ded1tction-Gaim of-Requ,irements of Sec. 35-B-Held, it is not necessa1y that expo1t sho1tld be directly ex-India-Contract for s1tpply of tea in United Kingdom-Expenditllre i11c1t"ed with regard to pelf onnance of services outside India in execlltion of the contract-Whether assessee, an India11 resident company was entitled to claim benefit of Sec. 35-B-Held, Yes. The respondent assessee, an Indian resident company, carrying on A B c the business of exporting tea, claimed weighted deduction u/s. 35-B of the D Income Tax Act, 1961, in respect of the expenditure incurred on export of tea from East Africa to the United Kingdom in connection with the execution of the contract for the supply of tea in the United Kingdom. Revenue disallowed the claim holding that Section 35-B would apply only if the exports were made from India. On reference, the High Court upheld E the assessee's claim, holding that to avail the benefit of weighted deduction the provision does not require that the export should be ex-India and that expenditure was incurred with regard to the performance of the service outside India, i.e. from East Africa to United Kingdom in connection with the execution of contract for supply of tea in the United Kingdom. These appeals had been filed by the Revenue against the decision of the High F Court. Dismissing the appeal, this Court HELD : 1.1. To claim the benefit of section 35-B of the Income-tax Act, 1961, the conditions to be satisfied are that : (i) the assessee must be G a domestic company which is resident in India; (ii) It must have incurred expenditure after February 29, 1968 but before March 1, 1983; (iii) Such expenditure should not be in the nature of capital expenditure or personal expenses of the assessee; (iv) the expenditure might have been incurred either or in association with any other person; (v) the nature of the H 809 810 SUPREME COURT REPORTS (2000] 1 S.C.R. A expenditure must answer the description referred in any one of the sub· clauses of clause (b). On these requirements being satisfied the assessee- company becomes entitled to the weighted deduction under Section 35-B. It is not necessary that the export should be directly ex-India (from India). [812-F-H; 813-A-B] B 1.2. The weighted deduction under Section 35-B was claimed by the assessee, an Indian resident company, in respect of the expenditure in- curred with regard to the performance of the services outside India i.e. in East Africa and United Kingdom in connection with the execution of the contract for supply of tea in the United Kingdom. The High Court rightly allowed assessee's claim. The Tribunal's reading of tine section that the C export should be ex-India is not supported by the language of the provision. [814-B; 813-C] CIT. v Continental Constmction Ltd., (1998) ITR 485 SC; Continental Constmction Ltd. v. CIT, (1990) 185 ITR 178; Bombay Bunnah Trading D Corporation Ltd. v. CIT, Bombay City-IV, (1984) 145 ITR 793, referred to. CIVIL APPELLATE JL:RISDICTION: Civil Appeal Nos. 2600-03 of 1994. From the Judgment and Order dated 12.12.88 of the Bombay High E Court in I.T.R 242 of 1976. F K.N. Rawal, Additional Solicitor General, M.L. Verma, Ms. Neera Gupta, Ms. Sushma Suri, Shail Kumar Dwivedi, S. Rajappa, B.K. Prasad, Hemant Sharma, K.N. Shukla, K.C. Kaushik, A.K. Sharma, M.B. Rao and Ms. A. Subhashini for the Appellant. Ranjit Kumar, Ankur Chauhan, R. Karanjawala, Ms. Nandini Gore and Mrs. M. Karanjawala for the Respondents. The Judgment of the Court was delivered by G SYED SHAH MOHAMMED QUADRI, J. In these five appeals the parties are common; the Revenue is the appellant and the assessee is the respondent, C.A. Nos. 2600-03 of 1994, which relate to the assessment years 1967-68 to 1970-71, arise from the judgment and order of the Division Bench of the High Court of Judicature at Bombay in Income-Tax Refer- H ence No. 242 of 1976 dated December 12, 1988. Following that judgment CJ.T. v. BOMBAY BURMAH, TRADING CORPN. [QUADRI, J.j 81 l the Division Bench disposed of Income Tax Reference No. 10 of 1987 A which pertains to the assessment years 1974-75 on July 30, 1998 which is under challenge in Civil Appeal No. 3788 of 1999. The common substantial qu
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