JUDGMENT
BHAGABATI PRASAD BANERJEE, J. :
The Tribunal has referred the following questions of law to this Court under s. 256(2) of the IT Act, 1961 for the asst. yr. 1976-77 for which the relevant accounting period ended on 31st December, 1975 :
“1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 10,02,000 representating the actuarially valued liability for gratuity for the year 1975 was not an allowable deduction in computing that total income of the assessee company for the asst. yr. 1976-77 ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee company was not entitled to weighted deduction under s. 35B of the Act in respect of the sum of Rs. 31,885 representing fees paid for the certification of goods ?
3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holing that the surtax liability under the Companies (Profits) Surtax Act, 1964 for the asst. yr. 1976-77 was not an allowable deduction in the income-tax assessment for the said assessment year” ?
2. The question No. 1 is now concluded by the Division Bench decision of this Court in the case of CIT vs. New Swadeshi Mills of Ahmedabad Ltd. reported in (1984) 147 ITR 163 (Cal). Following this decision, the question No. 1 is answered in the affirmative and in favour of the Revenue.
3. Regarding question No. 3 Mr. R. N. Dutt, learned advocate appearing on behalf of the assessee invited our attention to the judgment of the Gauhati High Court in the case of Doom Dooma Tea Co. Ltd. vs. CIT reported in (1989) 180 ITR 126 (Gau). The Gauhati High Court in that case dissented from the judgment of this Court and six other High Courts, since this point is covered by the decision of this Court in the case of Molins of India Ltd. vs. CIT reported in (1983) 144 ITR 317 (Cal), we are inclined to follow the judgment of this Court and accordingly the question of law in question No. 3 is answered in the affirmative and in favour of the Revenue.
4. With regard to question No. 2, Mr. Dutt, learned advocate for the assessee submitted that the Tribunal was wrong in not allowing the weighted deduction under s. 35B in view of the fact that the expenditure that was incurred was for certification of the goods for export, etc. The ITO found as follows :
“On scrutiny of the claim for deduction under s. 35B, it is found that Rs. 4,800 being fees paid to Indian Engineering Export Council and Rs. 31,885 paid for certification of goods for export, etc., do not qualify for deduction under this section because these items of expenditure are not covered by any of the sub-cls. (i) to (ix) of s. 35B(1)(b). Aggregate of the disqualifying expenditure is Rs. 36,685 and its 50% is Rs. 18,342. Hence, this amount is disallowed out of the total deduction claimed under s. 35B.”
5. On appeal, the Tribunal in this connection also found as follows :
“4. The second ground raised by the company is that the Commissioner (A) had erred in rejecting its claim for weighted deduction under s. 35B of the IT Act in respect of Rs. 31,885 representing fees paid for certification of goods prior to their being exported. In the case of J. Hemchand & Co. vs. ITO (1982) 1 SOT 150 (Bom) (SB) a Special Bench of the Appellate Tribunal has held, vide its order dt. 17th June, 1978 in ITA No. 3255 (Bom) of 1976-77 that certificate charges paid by an assessee for certifying the place of origin and price of goods, etc., exported by the assessee do not qualify as an admissible item of expenditure for the purposes of s. 35B of the IT Act. Respectfully following the aforesaid order of the Special Bench, we hold that the Commissioner(A) was justified in rejecting the claim of the company”.
6. On appeal the CIT(A) found as follows :
“2. The next ground relates to ITOs rejection of appellants claim for weighted deduction under s. 35B in respect of the following expenses incurred :
(i) Fees paid for certification of goods prior to their being exported
Rs. 31,885
(ii) Fees paid to the Indian Engineering Export Promotion Council
Rs. 4,800
Rs. 36,685
The ITO has rightly pointed out that these expenses did not qualify for deduction under s. 35B because these were not covered by any of the sub-cls. (i) to (ix) of s. 35B(1)(b). It was argued before me that since these expenses were necessary before any expenses could be made, the weighted deduction should have been allowed. I do not find any force in this contention. In my opinion, the qualifying expenditure under s. 35B would only be such as would be covered by the sub-clauses of s. 35B(1)(b). No interference, therefore, can be made under this ground also.”
7. Before the IT authorities, no principal clause or head under which the deduction was cited. It was urged by Mr. Dutt that the expenditure should come within cl. (vi) of s. 35B (1)(b) of the said Act. In support of this contention, Mr. Dutt relied on a judgment of this Court in the case of Union Carbide India Ltd. vs. CIT reported in (1987) 165 ITR 558 (Cal). In that case, the assessee claimed weighted deduction under s. 35B (1)(b)(vi) of the IT Act 1961, in respect of export agency inspection fees paid on account of export of frozen shrimps on the grounds that the fees were paid for the purpose of obtaining a certificate from the agency as to the quality of the goods, that the certificate amounted to technical information on the quality of the products sought to be exported and the production of such a certificate was an essential condition for saleability of the goods in the foreign country as the Government had prohibited by a notification, export of fish and fish products unless accompanied by such a certificate and that the expenditure for obtaining such certificate was incurred directly for export of the goods overseas. In that case, the ITO disallowed the claim of the assessee. The Commissioner (A) and the Tribunal allowed the claim of assessee for weighted deduction. On a reference, the High Court in that case found that the Tribunal accepted the contention of the assessee that the certificate furnished contained technical information for promotion of sales of the assessees goods outside India and that the expenditure to obtain such a certificate was incurred directly for export of the goods overseas. In view of such findings made by the Tribunal, which was not under challenge, in that case, this Court had allowed the weighted deduction. In the instant case, there was no finding by the Tribunal that the certificate in question amounts to furnishing samples or technical information for promotion of sales of such goods outside India or overseas. In the instant case, the finding of the income-tax authorities does not bring the case of the assessee within the scope of cl. (v) of s. 35B(1)(b) of the IT Act, 1961. It is a settled principle that the onus was on the Revenue to show that a particular item comes within the taxable items but the onus is just opposite in case of a claim for deduction or exemption. In case of deduction, the party concerned, who claims the deduction, has to bring the case strictly within the scope of the relevant provisions of the Act. But in the instant case, we do not find that the assessee had been able to establish that the expenditure incurred by the assessee comes within the purview and scope of cl. (vi) of s. 35B(1)(b) of the IT Act, 1961. In that view of the matter, question No. 2 is also answered in the affirmative and in favour of the Revenue.
8. All the three questions are answered in the affirmative and in favour of the Revenue.
9. With regard to question No. 3 a certificate of fitness for leave to appeal to Supreme Court under s. 261 of the IT Act, 1961 has already been granted in the case of Molins of India Ltd. vs. CIT (supra) and the prayer of Mr. Dutt, learned advocate for the assessee, or a certificate for fitness is granted with regard to question No. 3 for leave to appeal to Supreme Court under s. 261 of the IT Act, 1961. Let the certificate be drawn up separately and expeditiously.
There will be no order as to costs.
SUHAS CHANDRA SEN, J. :
I agree.