JUDGMENT
B.P. Jeevan Reddy, C.J.
1. Under Section 256(1) of the Income-tax Act, 1961, the Tribunal has stated the following question at the instance of the Revenue:
“Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally correct in allowing the weighted deduction on air freight expenses in spite of a clear prohibition contained to this effect in Section 35B(1)(b)(iii) of the Income-tax Act, 1961 ?”
2. The assessee is a firm. It derives income from sales of perfumes and scents. It also exports goods to other countries. For the assessment year 1975-76, it claimed weighted deduction on certain expenditure incurred by it under Section 35B(1)(b) of the Act which was disallowed by the Income-tax Officer. On appeal however, the Appellate Assistant Commissioner allowed the weighted deduction, and it was confirmed by the Tribunal on an appeal preferred by the Department. The petition is against the order of the Tribunal.
3. The expenditure concerned was incurred towards air freight, i.e., for exporting the goods. The question is whether the assessee is entitled to weighted deduction on such expenditure. Clause (b) of Sub-section (1) of Section 35B, in so far as it is relevant, reads as follows :
(b) The expenditure referred to in Clause (a) is that incurred wholly and exclusively on –…
(iii) distribution, supply or provision outside India of such goods, services or facilities, not being expenditure incurred in India in connection therewith or expenditure (wherever incurred) on the carriage of such goods to their destination outside India or on the insurance of such goods while in transit”
4. A reading of this clause shows that weighted deduction is available on . expenditure incurred wholly and exclusively on distribution, supply or provision of goods outside India and that the expenditure incurred in carrying the goods to their destination is not so allowable. It may be noted that the words beginning with “not being expenditure incurred” and ending with the words “while in transit” were inserted by the Finance Act, 1970, with effect from April 1, 1968. On a reading of the clause, we are clearly of the opinion that even the expenditure, wherever incurred, on the carriage of goods to their destination outside India is excluded and does not qualify for weighted deduction.
5. For the above reasons, the question referred is answered in the negative, i.e., in favour of the Revenue and against the assessee. No costs.