{"id":208698,"date":"1997-08-28T00:00:00","date_gmt":"1997-08-27T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/the-commissioner-of-income-vs-ms-hero-cycles-pvt-ltd-ludhiana-on-28-august-1997"},"modified":"2015-02-15T04:27:48","modified_gmt":"2015-02-14T22:57:48","slug":"the-commissioner-of-income-vs-ms-hero-cycles-pvt-ltd-ludhiana-on-28-august-1997","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/the-commissioner-of-income-vs-ms-hero-cycles-pvt-ltd-ludhiana-on-28-august-1997","title":{"rendered":"The Commissioner Of Income … vs M\/S Hero Cycles Pvt. Ltd. Ludhiana on 28 August, 1997"},"content":{"rendered":"
Supreme Court of India<\/div>\n
The Commissioner Of Income … vs M\/S Hero Cycles Pvt. Ltd. Ludhiana on 28 August, 1997<\/div>\n
Bench: Suhas C. Sen, S. Saghir Ahmad<\/div>\n
           PETITIONER:\nTHE COMMISSIONER OF INCOME TAX(CNTL), LUDHIANA\n\n\tVs.\n\nRESPONDENT:\nM\/S HERO CYCLES PVT. LTD. LUDHIANA\n\nDATE OF JUDGMENT:\t28\/08\/1997\n\nBENCH:\nSUHAS C. SEN, S. SAGHIR AHMAD\n\n\n\n\nACT:\n\n\n\nHEADNOTE:\n\n\n\nJUDGMENT:\n<\/pre>\n
Present:\n<\/p>\n
\t      Hon’ble Mr. Justice Suhas C. Sen
\n\t      Hon’ble Mr. Justice S. Saghir Ahmad]
\nT.L.V. Iyer, Sr. Adv., Ms. Renu George, S. Rajappa, C. Radha
\nKrishna,  Ms.\tJanaki\tRamachandran.  Ms. Meenakshi  Arora,
\nA.T.M. Sampat  Adcs.   with  him   for\tthe   appellant\t  in
\nC.A.No. 4671\/88, 4043\/84,5775\/95, 5620-21\/95 and 2230-31\/95.
\nUma Datta and B. Kanta Rao, Advs. for the Respondents.\n<\/p>\n
\t\t\t O R D E R
\nThe following Order of the Court was delivered:
\nWith  C.A.Nos.7666,   7667,  7965\/96,\t1494-96\/88,  556\/90,
\n5755\/95. 4043\/84,  7763\/95, 7045\/95,  12419\/96,\t 5620-21\/95,
\n6942\/95, 387\/85, 786-88, 7847, 2230-31, 3120\/95.
\n6085\/97, 6087-6033\/97,\t  606\/97, 6089-91\/97,
\n6-92\/97, 6093\/97, 6095\/97, 6094\/97
\nCivil Appeals  Nos. 6085\/97,  6087-6083\/97,  6086\/97,  6089-
\n91\/97, 6092\/97, 6093\/97, 6095, 6094\/97 of 1997
\n(Arising out  of SLP  (C) Nos.\t7485\/86,  4588-89\/89.  9027,
\n10982\/87, 4663-65\/89, 8620, 10949\/95, 4671\/88 and 9065\/94)
\n\t\t\t O R D E R
\nCivil Appeal Nos. 7665\/96
\n     The following  question of\t law  was  referred  by\t the
\nTribunal to the High Court:\n<\/p>\n
     “Whether on  the facts  and in  the
\n     circumstances  of\tthe  case  on  a
\n     proper  interpretation  of\t Section
\n     35-B of  the income  Tax Act, 1961,
\n     the Appellate Tribunal was right in
\n     law in  allowing  assessee’s  claim
\n     for weighted  deduction in\t respect
\n     of\t  “Export    Sales   Commission”
\n     “E.C.G.C.\tCharges”   and\t“Foreign
\n     Dealers Visiting Expenses”?<\/p><\/blockquote>\n
     The High  Court declined  to call for a reference under
\nSection 256(2) of the Income Tax Act, 1961.  It appears that
\nthe claim for deduction under Section 358 was not originally
\nallowed at  all.  Thereafter, on an assesee’s application an
\norder was passed by the Commissioner of Income Tax (Appeals)
\nJalandhar, in  which he\t directed certain  allowances to  be
\ngiven on  proportionate\t basis\tafter  verification  of\t the
\nassessee’s claim under Section 358.\n<\/p>\n
     The   Income   Tax\t  Officer   thereafter\t entertained
\nassessee’s prayer for rectification of the order and allowed
\nthe assessee’s\tclaim in  respect of  matters like  Coloured
\nAlbums,\t Export\t staff\ttravelling  expenses,  Export  sales
\ncommission, E.c.G.C.,  foreign\tdealers\t visiting  expenses.
\nRectification under  Section  154  can\tonly  be  made\twhen
\nglaring mistake\t of fact  or law  has been  committed by the
\nofficer passing\t the order becomes apparent from the record.
\nRectification is  not possible if the question is debatable.
\nMoreover, the point which was not examined on fact or in law
\ncannot be  dealt as  mistake apparent  on the  record.\t The
\ndispute raised a mixed question of fact and law.\n<\/p>\n
     The Tribunal  was in  error in upholding the assessee’s
\nclaim for weighted deductions.\n<\/p>\n
     There is  no point\t in sending  the matter\t to the High
\nCourt to  deal with  the question  raised at this stage.  We
\ntreat the  question raised  at this  stage.   We  treat\t the
\nquestion as  referred to  this Court and answer the question
\nin the negative and in favour of The Revenue.  There will be
\nno order as to costs.  The appeal is allowed.
\nC.A. Nos. 7666\/7667\/96, SPL(C) Nos.7485\/86, 4588-89\/89
\n     Leave granted in Special Leave Petitions.
\n     The following  questions of law was sought to be raised
\nby the\tRevenue from the order of the Tribunal for reference
\nto the High Court:\n<\/p>\n
     “(i)   Whether    on    a\t  proper
\n     interpretation  of\t the  agreements
\n     between   the    S.T.C.   and   its
\n     subsidiary\t HHEC,\t the   Appellate
\n     Tribunal is right in law in holding
\n     that  one\tper  cent  margin  money
\n     earned  by\t  the  HHEC   under  its
\n     agreement\t of    Export\tBusiness
\n     Association with the assessee is in
\n     the  nature   of\texpenditure   as
\n     contemplated by Section 35B and not
\n     the income\t of the\t HHEC on its own
\n     entitlement   on\t the   aforesaid
\n     agreements as held by the I.T.O?\n<\/p>\n
     (ii) Whether  on the  facts and  in
\n     the circumstances\tof the case, the
\n     Appellate\tTribunal   is  right  in
\n     allowing weighted\tdeduction  under
\n     Section 35B of the Act to the total
\n     payment of\t Rs. 1,87,476\/-\t to  the
\n     HHEC without any bifurcation?\n<\/p>\n
     (iii)\t Whether   on\ta   true
\n     interpretation on\tSection\t 35B  of
\n     the Act,  the services  rendered by
\n     the  HHEC\t were  to   be\t related
\n     itemwise to the various sub-clauses
\n     of Clause (b) of sub-section (1) so
\n     as\t to   entitle  the  assessee  to
\n     weighted deduction\t in  respect  of
\n     them?\n<\/p>\n
     The Commissioner of Income Tax (Appeals) as well as the
\nTribunal  allowed   this  claim\t  of  the  assessee  without
\nexamining  the\tfacts  of  this\t case.\t  The  deduction  is
\npermissible if\tthe  expenditure  is  laid  out\t wholly\t and
\nexclusively for\t the purpose  mentioned in sub-clause (b) of
\nSection 35B.   It  is for  the assessee\t to prove  that\t the
\nentire expenditure involved was exclusively for the purposes
\nmentioned in  sub-clause (b)  of Section  35B.\tThe Tribunal
\nhas also  to give  a finding  as to  the entitlement  of the
\nassessee with  reference to the particular of sub-clause (b)
\nof Section  35B.  The facts have to be found out and the law
\nhas to be applied to those facts.  It appears that generally
\na certain  percentage of  the claim  has been  allowed under
\nSection 35B  without adverting\tto any of the sub-clauses of\n<\/p>\n
(b) of\tSection 35B.  Under those circumstances, we think it
\nfit to\tset aside  the order  of the  Tribunal and  send the
\nmatter back to the Tribunal to dispose it of after examining
\nthe facts  afresh.   The appeals  are allowed.\tThe order of
\nthe High  Court as  well  as  the  appellate  order  of\t the
\nTribunal is set aside.\tThere will be no order as to costs.
\nCivil Appeal No. 7965\/96
\n     The amount\t involved is  Rs. 10,000\/-only\tand the case
\nbeing 23  year old  we do  not feel  inclined to go into the
\nquestion raised.   However, we make it clear that we are not
\nexpressing any\topinion on  the correctness  of the decision
\nreferred by  the Tribunal.   The  appeal is dismissed. There
\nwill be no order as to costs.\n<\/p>\n
SLP(C) No. 9027\/87
\n     The Special Leave Petition is dismissed.
\nSLP (C) No.10982\/97
\n     Leave granted
\n     In this  case large  number of questions were sought to
\nbe raised.  We shall deal with only the question relating to
\nSection 35B.   It  appears that\t the  Tribunal\twas  totally
\nunmindful of  the various  sub-clauses\tof  Section  35B(b).
\nExpenses  can  only  be\t allowed  if  they  are\t wholly\t and
\nexclusively incurred  for any  of the  purposes mentioned in
\nthese  sub-clauses.\tThe   section  is  quite  clear\t and
\ncategorical.   There is\t no way\t that any other Section 35B.
\nIt is the assessee’s duly to prove acts which will bring the
\ncase within  any of  these sb-clauses.\t Unless that is done
\nthe assessee  will not\tbe entitled  to get  this deduction.
\nThe Tribunal  has allowed the deduction without verifying or
\nexamining the sub-clauses under which this could be allowed.\n<\/p>\n
     We have  passed similar  orders in\t a large  number  of
\ncases but in this case on behalf of the assessee it has been
\ncontended that\tthere is  a circular issued by Central Board
\nof Direct Taxes, New Delhi which should conclude the matter.
\nA copy\tof the so-called circular dated 9th April, 1981\/13th
\nApril, 1981  has been  handed over  in Court.  It  does\t not
\nappear that  the document  handed over in Court is a copy of
\nCircular at all.  It is a letter written to one Shri D’Souza
\nwith reference to a letter written by his predecessor.
\nMoreover, it  is well-settled  that circulars  can bind\t the
\nIncome Tax Officer but will not bind the appellate authority
\nor the Tribunal or the Court or even the assessee.  There is
\nnothing\t in   the  alleged   circular  which   supports\t the
\ncontention of  the assessee.   It merely says that each case
\nhas to\tbe examined  and the issue would be basically a find
\nof fact.   The\tassessee had  not made\this claim before the
\nIncome Tax Officer by relying on this Circular.\n<\/p>\n
     We set  aside the order of the High Court.\t We also set
\naside the  appellate order  of the  Tribunal.\tThe Tribunal
\nmust examine  the question  of Section 35B with reference to
\nthe various sub-sections of clause (b) of that section.\t The
\nTribunal will  examine the  facts of  each claim made by the
\nassessee and  find out\twhether the  claim  can\t be  allowed
\nhaving regard  to the  facts and  also the  sub-sections  of
\nSection 35B(b).\t  The  case is sent back to the Tribunal for
\nfresh disposal\tin the\tlight of  the above  direction.\t The
\nassessee must  pay cost\t of  this  appeal  assessed  at\t Rs.
\n5,000\/-\n<\/p>\n
SLP (C) Nos. 4663-645\/89
\n     Leave granted.\n<\/p>\n
     The claim of the assessee is in respect of relief under
\nSection 35B  in respect\t of certain expenditures incurred by
\nthe assessee.\tThe order under challenge passed by the High
\nCourt is  set aside.  The appellate order of the Tribunal is
\nalso set  aside.  The matter should go back to the Tribunal.
\nThe Tribunal will examine the case.  The assessee must prove
\nbefore the  Tribunal the facts in respect of his claim.\t The
\nTribunal will  examine the  facts and  consider the  various
\nsub-clauses, sub-sections (b) of section 35B and will decide
\nwhether the  assessee is  entitled to  exemption in  any  of
\nthese sub-clauses  in respect  of expenses  incurred.\t The
\nappeals are  disposed of.   There  will be  no order  as  to
\ncosts.\n<\/p>\n
SLP (C) No. 8620\/95
\n     Leave granted.\n<\/p>\n
     In this  case two\tquestions are  involved.   So far as
\nSection 40C  is concerned,   the  appeal  will\thave  to  be
\ndismissed.  So far as Section 35B is concerned, the weighted
\ndeduction must\tbe examined  by the Tribunal on the basis of
\nthe facts proved by the assessee and having reference to the
\nvarious sub-clauses  of clause\t(b) of\tSection 35B.  If the
\nassessee’s case\t comes specifically within any of these sub-
\nclauses it  has to  be allowed\totherwise not.\tThe order of
\nthe High  Court is wet otherwise not.  The order of the High
\nCourt is  set aside.   The case is sent back to the Tribunal
\nfor re-examination  of the  case in  the light\tof the above
\ndirection.  No order as to costs.\n<\/p>\n
SLP (C) No. 10949\/95
\n     Leave granted.\n<\/p>\n
     This case\tis only\t concerned with\t Section 35B.\t The
\nweighted deduction  must be  examined by the Tribunal on the
\nbasis of  the  facts  proved  by  the  assessee\t and  having
\nreference to  the  various  sub-clauses\t of  clause  (b)  of
\nSection 35B.   If  the assessee’s  case\t comes\tspecifically
\nwithin any  of\tthese  sub-clauses  it\thas  to\t be  allowed
\notherwise not.\t The  order of\tthe High Court is set aside.
\nThe appellate  order of the Tribunal is also set aside.\t The
\ncase sent  back to  the Tribunal  for re-examination  of the
\ncase in\t the light  of the  above direction.  No order as to
\ncosts.\n<\/p>\n
SLP (C) No.9065\/94 & C.A.Nos. 1494-96\/88 and 5567\/90
\n     Leave granted in Special Leave Petition.
\n     The question in this case relates to scope o Section 44
\nof the Income Tax Act, 1961.  The Section states:\n<\/p>\n
     “Sec. 44.\tNotwithstanding anything
\n     to the  contrary contained\t in  the
\n     provisions of  this Act relating to
\n     the    computation\t    of\t  income
\n     chargeable under the head “Interest
\n     on securities”,  “income from house
\n     property”,\t  “Capital   gains”   or
\n     “Income from  other sources”, or in
\n     Section 199  or in\t Sections 28  to
\n     43B, the  profits and  gains of any
\n     business  of  insurance,  including
\n     any such  business carried\t on by a
\n     mutual insurance  company or  by  a
\n     co-operative  society,   shall   be
\n     computed  in  accordance  with  the
\n     rules  contained\tin   the   First
\n     Schedule.”<\/p><\/blockquote>\n
     The plain\treading of  the section will go to show that
\nnotwithstanding the  other provisions of the Income Tax Act,
\nin particular  provisions of Sections 28 to 43B, the profits
\nand gains  of any business of insurance shall be computed in
\naccordance with\t the rules  contained in the First Schedule.
\nThis is\t a non-obstante clause and rules have been specially
\nmade for  computation of  profits  and\tgains  of  insurance
\nbusiness.   The rules are contained in the First Schedule of
\nthe Act.  There is a rule for computation of profits of Life
\nInsurance Business  (Rule 2).\tAnother rule has been framed
\n(Rule 5)  for computation  of profits  and  gains  of  other
\ninsurance business.   This  means that\tprofits and gains of
\nother insurance\t business. This means that profits and gains
\nof insurance business (whether the Life Insurance or General
\ninsurance) can\tonly be\t assessed in the manner laid down in
\nthe rules  contained in\t the First  Schedule and  not in any
\nother manner.\n<\/p>\n
     Ms. Ramachandran,\tlearned counsel\t appearing  for\t the
\nassessee, has  contended that  Section 44 speaks of “Section
\n28 to  Section 43B”.\tIt  does  not  specifically  mention
\nSection 35B.   Therefore,  the assessee\t was entitled to the
\nbenefit of Section 35B.\t Section 35B was inserted in the Act
\nby way\tof amendment.\tWhen  the original  Act\t was  passed
\nSection 35B  was not in the Statute Book.  The contention of
\nMs. Ramachandran  is that  when Section 35B was inserted, it
\nwas not\t specifically mentioned\t that Section  35B will\t not
\napply to  Insurance Company.\tTherefore,  the\t benefit  of
\nsection 35B will have to be given to the Insurance Company.\n<\/p>\n
     We\t are  unable  to  accept  this\tcontention  for\t two
\nreasons.   First, when\tthe Act\t speaks\t of  Section  28  to
\nSection 43B then each one of the sections from Section 28 to
\nSection 43B  will be  included.\t  The newly inserted Section
\n35B was\t not  specifically  mentioned  because\tit  was\t not
\nnecessary  to  do  so  just  as\t it  was  not  necessary  to
\nspecifically mention  Section 35B  in Section  29 which lays
\ndown that  computation of  profits and\tgains of business or
\nprofession  shall   be\tcomputed   in  accordance  with\t the
\nprovisions contained in Section 30 to 43C.\n<\/p>\n
     Moreover, when  the Act  specifically says that profits
\nand  gains  of\tinsurance  business  shall  be\tcomputed  in
\naccordance with\t the rules  contained in  the First Schedule
\nthen such  computation has  to be made according to the rule
\nand not\t any other  rule.   We\tare  unable  to\t accept\t the
\ncontention of  Ms. Ramachandran\t that the benefit of Section
\n35B should also be given to any insurance Company.\n<\/p>\n
     There are\tcertain other questions,  apart from Section
\n35B, involved  in this\tcase arising  out of the decision of
\nthe High  Court.  Those points are not before us.  We do not
\nexpress any opinion on them.  The argument was confined only
\nto Section 35B.\n<\/p>\n
     In that  view of the matter, we uphold the order of the
\nHigh Court  and dismiss\t these appeals.\t  There\t will be  no
\norder as to costs.\n<\/p>\n
S.L.P. No. 4671\/88 & C.A.Nos. 5755\/95 and 4043\/84
\n     Leave granted in S.L.P.\n<\/p>\n
     In view  of the  decision of this Court in Commissioner
\nof  Income  Tax,  Tamil\t Nadu  vs.  M\/s\t National  Palayacot
\nCompany, Kurinjipadi<\/a>  – [Civil\tAppeal Nos.  16-17 of 1985],
\nthese appeals  are dismissed.\tThere will be no order as to
\ncosts.\n<\/p>\n
C.A.No.7763\/95
\n     The following  two questions of law have been sought to
\nbe raised in this Court:\n<\/p>\n
     1. “Whether on the facts and in the
\n     circumstances of the case, the ITAT
\n     is\t right\t in  law   in\tallowing
\n     weighted  deduction  under\t section
\n     35B  of   the  I.T.   Act\ton   car
\n     maintenance at  Rs. 49,939\/-, Motor
\n     Cycle at  Rs. 3697\/-  and Generator
\n     Expenses  at   Rs.\t 4639\/-\t without
\n     linking the  expenditure to  one or
\n     more the  activities referred to in
\n     various  sub-clauses  of  35B(1)(b)
\n     and also  ignoring the  prohibition
\n     contained in  sub-clause (iii) ibid
\n     regarding\t    expenditure\t      on
\n     distribution, supply  or  provision
\n     outside   India   of   Goods   etc.
\n     Incurred after 31.3.1978?\n<\/p><\/blockquote>\n
     2. Whether\t on the facts and in the
\n     circumstances of the case, the ITAT
\n     is right in law in holding that the
\n     assessee was  entitled to\tweighted
\n     deduction\tunder\tsection\t 35B  on
\n     entire expenditure of Rs.4,24,773\/-<\/p><\/blockquote>\n
     and  50%\tof  the\t expenditure  on
\n     various   items,\taggregating   to
\n     Rs.4,24.773\/-  and\t  50%\tof   the
\n     expenditure   on\tvarious\t  items,
\n     aggregating    to\t  Rs.9,89,9509\/-<\/p><\/blockquote>\n
     without linking  the expenditure to
\n     one  or   more  of\t the  activities
\n     referred to  in various sub-clauses
\n     of Section\t 35-B  (1)(b)  and  also
\n     ignoring the  prohibition contained
\n     on sub-clause  (iii) ibid regarding
\n     expenditure on distribution, supply
\n     or provision outside India of goods
\n     etc. incurred after 31.3.1978?” The
\n     High Court\t dismissed the reference
\n     application
\nunder Section 256 (2).\n<\/p>\n
     We are  of the  opinion that  the Tribunal cannot allow
\nany weighted  deduction without\t linking the  expenditure to
\none or\tmore of\t the activities\t referred to in various sub-
\nclauses of Section 35(1)(b).  Therefore, in our opinion, the
\nquestion must  be answered  in the negative and in favour of
\nthe Revenue.   The  Tribunal will now decide the case afresh
\nafter examining\t the  nature  of  the  expenditure  and\t the
\npurposes for which it was spent having regard to the various
\nsub-clauses of\tSection 35B  (1)(b).   The order of the High
\nCourt is  set aside.  The appellate order of the Tribunal is
\nalso set  aside.   The appeal  is allowed.  There will be no
\norder as to costs.\n<\/p>\n
C.A.No.7045\/95
\n     The dispute  in this  case\t relates  to  an  amount  of
\nRs.1,52,694\/- (Spindle\tFee) paid to the Indian Cotton Mills
\nFederation for\tExport Promotion Funds.\t The contribution to
\nthe Indian  Cotton Mills Federation does not fall within any
\nof the\tsub-clauses of Section 35B(b).\tThe contribution may
\nbe for\tthe promotion  of export  generally but this sort of
\ncontribution to a general body or Chamber of Commerce cannot
\nqualify for weighted deduction.\t The appeal is allowed.\t The
\norder of  the High Courts well as the appellate order of the
\nTribunal are set aside.\t There will be no order as to costs.
\nC.A.No.12419\/96
\n     In view  of the  observations made\t in SLP No.10982\/87,
\nthe appeal is allowed.\tThere will be no order as to costs.
\nC.A. Nos. 5620-21\/95
\n     In view  of the  observations made\t earlier these cases
\nare remanded  back to  the  Tribunal.\t The  Tribunal\twill
\nexamine the cases in the light of the various sub-clauses of
\nSection 35B  and will  also examine  the facts\tto find\t out
\nwhether the  expenditures come\twithin any of the categories
\nmentioned in  sub-clause (b)  of Section  35B.\tThe order of
\nthe High  Court is  set aside.\t The  appellate order of the
\nTribunal is  also set  aside.\tThe Tribunal will decide the
\ncases in  view of  the directions  given hereinabove.  There
\nwill be no order as to costs.\n<\/p>\n
C.A. No.6942\/95
\n     The dispute  in this case is about the allowances under
\nSection 35B.   The  allowances in  this case  relate to\t (a)
\npayment to  Hosiery Exporters  Association, (b)\t Payment  to
\nHHEC, (c) Contribution to Hosiery Exporters Association, and\n<\/p>\n
(d) Charges  paid to  ECGC:  are  also\texpenditure  on\t (e)
\nEstablishment, (f) Bonus (g) leave with wages, (h) Salary to
\nDirectors, (i)\tPostage\t telephone  and\t telegram,  and\t (j)
\nprinting and stationary.\n<\/p>\n
     The only  question in  whether payment of HHEC and ECGC
\nqualify for  special allowance under Section 35B.  The other
\nexpenditures are not allowable.\t The order of the High Court
\nis set\taside.\t The appellate order of the Tribunal is also
\nset aside.  The matter is remanded back to the Tribunal only
\nto consider whether the payment of HHEC will qualify for the
\nspecial exemption  given under\tSection 35B.   The  Tribunal
\nwill examine  the facts and find out whether the payment was
\nfor any\t of the\t activities mentioned  in sub-clause  (b) of
\nSection 35B.   If the expenditure was wholly and exclusively
\nincurred for  any of  these purposes,  the expenditure\twill
\nqualify for  deduction under Section 35B.  The Tribunal will
\nexamine the  case afresh with regard to payments to HHEC and
\nalso to\t ECGC.\t The other  items mentioned in the appellate
\norder of  the Tribunal\twill stand  disallowed.\t The case is
\nremanded back  to the  Tribunal for  fresh  disposal.\t The
\nappeal is allowed.  There will be no order as to costs.
\nC.A.No.387 of 1985
\n     The appeal\t is dismissed.\tThere will be no order as to
\ncosts.\n<\/p>\n
C.A. Nos.786-88 of 1995
\n     The appeals are dismissed.\n<\/p>\n
C.A.No.7847 of 1995
\n     The following  question of law was referred to the High
\nCourt:\n<\/p>\n
     “Whether on  the facts  and in  the
\n     circumstances of  the  case,  on  a
\n     proper  interpretation  of\t Section
\n     35B,  the\tAppellate  Tribunal  was
\n     right in law in allowing in respect
\n     of\t foreign   claim  for\tweighted
\n     deduction\tin   respect  of  region
\n     sales commission,\tE.C.G.C. charges
\n     and  expenditure\ton  articles  of
\n     presentation?”<\/p><\/blockquote>\n
     The question  relates to  expenditure for\twhich relief
\nwas claimed  under Section  35B.   The Tribunal\t allowed the
\nexpenditure without  specifically deciding  under which sub-
\nclause (b)  of Section\t35B the expenditure falls.  The case
\nis remanded  back to  the Tribunal,  The Tribunal  will\t re-
\nexamine\t the  case  having  regard  to\tthe  nature  of\t the
\nexpenditure and\t will  try  to\tfind  out  whether  such  an
\nexpenditure qualifies  for weighted  deduction under Section
\n35B.   The order  of the  High Court  is  set  aside.\t The
\nappellate order\t of the\t Tribunal is  also set\taside.\t The
\nTribunal will now examine the facts of the case and find out
\nwhether the expenditures are allowable under any of the sub-
\nclauses of Section 35B(b).  The appeal is allowed.  No order
\nas to costs.\n<\/p>\n
C.A.Nos. 2230-31 of 1995
\n     The appeals  are dismissed.   There will be no order as
\nto costs.\n<\/p>\n
C.A.Nos.3120 of 1995
\n     The dispute  in this  case is about the allowability of
\nweighted deduction  under Section 35B of the Income Tax Act.
\nThe  dispute   relates\tto  various  expenditures  including
\ncommissions paid  to STC,  HHEC and  ECGC.   There are other
\nexpenditures in\t regard to salary,  Director’s remuneration,
\nrent, printing\tand stationery,\t postage and  telegrams etc.
\nWhich have  not been  proved to\t be  wholly  or\t exclusively
\nincurred  for\tthe  purposes  of  any\tof  the\t sub-clauses
\nmentioned in sub-clause (b) of Section 35B.  These will have
\nto be  disallowed.  The order of the Tribunal to this extent
\nis erroneous.  so far as commission payable to STC, HHEC and
\nECGC is\t concerned, this  will have  to be  examined by\t the
\nTribunal afresh.   The\tonus is\t on the assesee to prove the
\nfacts which  will enable  him to  claim weighted  deduction.
\nThe Tribunal will examine the claim of the assessee and will
\nfind out whether the claim is allowable having regard to any
\nof the\tsub-clauses of\tSection 35B(b).\t The judgment of the
\nHigh Court  under appeal  is set aside.\t The appellate order
\nof the\tTribunal is  also set  aside.  The Tribunal will now
\nre-hear the  case on  the points relating to commission paid
\nto STC, HHEC, ECGC only.  The appeal is allowed.  There will
\nbe no order as to costs.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India The Commissioner Of Income … vs M\/S Hero Cycles Pvt. Ltd. Ludhiana on 28 August, 1997 Bench: Suhas C. Sen, S. Saghir Ahmad PETITIONER: THE COMMISSIONER OF INCOME TAX(CNTL), LUDHIANA Vs. RESPONDENT: M\/S HERO CYCLES PVT. LTD. LUDHIANA DATE OF JUDGMENT: 28\/08\/1997 BENCH: SUHAS C. SEN, S. SAGHIR AHMAD ACT: HEADNOTE: […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-208698","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nThe Commissioner Of Income ... vs M\/S Hero Cycles Pvt. Ltd. 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