Commissioner of Income-tax Vs. Nagesh Knitwears - Court Judgment

Excerpt:

.....appeal shall lie. even otherwise, the word judgment as defined under section 2(9) means a statement given by a judge on the grounds of a decree or order. thus the contention that against an order passed by a single judge in an appeal filed under section 104 c.p.c., a further appeal lies to a division bench cannot be accepted. the newly incorporated section 100a in clear and specific terms prohibits further appeal against the decree and judgment or order of a single judge to a division bench notwithstanding anything contained in the letters patent. the letters patent which provides for further appeal to a division bench remains intact, but the right to prefer a further appeal is taken away even in respect of the matters arising under the special enactments or other instruments having the force of law be it against original/appellate decree or order heard and decided by a single judge. it has to be kept in mind that the special statute only provide for an appeal to the high court. it has not made any provision for filing appeal to a division bench against the judgment or decree or order of a single judge. no letters patent appeal shall lie against a judgment/order passed by a..........yr. 1979-80, has been referred for opinion by the income-tax appellate tribunal, chandigarh bench (for short, 'the tribunal') : 'whether, on the facts and in the circumstances of the case, on the proper interpretation of s. 35b of the it act, the tribunal was right in law in allowing weighted deduction on the following items of expenditure : rs. (i) payment of hhec 10,952(ii) payment of wwpc 25,846(iii) subscription of wwpc 16,750(iv) payment to hea 1,850' 2. the assessee exported hosiery goods. the assessee paid commission, service charges and subscription to various agencies. deductions under s. 35b of the it act, 1961 (for short, 'the act'), were claimed on such payment. the ao noticed that the sums of rs. 25,846 and rs. 16,750 had been paid to wool and woollen export promotion council (wwepc) @ one-fourth per cent on the export sales. these were contributions by the assessee to the wwepc as its member, following a decision taken at the meeting of the council on 14th may, 1979. similarly, a sum of rs. 10,952 was paid by the assessee to handicrafts and handloom export corporation (hhec) @ 1 per cent on the export sales. another sum of rs. 1,850 was paid to hosiery exporters.....

Judgment:

ORDER

N.K. Agrawal, J.

1. Following question of law, for the asst. yr. 1979-80, has been referred for opinion by the Income-tax Appellate Tribunal, Chandigarh Bench (for short, 'the Tribunal') :

'Whether, on the facts and in the circumstances of the case, on the proper interpretation of s. 35B of the IT Act, the Tribunal was right in law in allowing weighted deduction on the following items of expenditure : Rs. (i) Payment of HHEC 10,952(ii) Payment of WWPC 25,846(iii) Subscription of WWPC 16,750(iv) Payment to HEA 1,850'

2. The assessee exported hosiery goods. The assessee paid commission, service charges and subscription to various agencies. Deductions under s. 35B of the IT Act, 1961 (for short, 'the Act'), were claimed on such payment. The AO noticed that the sums of Rs. 25,846 and Rs. 16,750 had been paid to Wool and Woollen Export Promotion Council (WWEPC) @ one-fourth per cent on the export sales. These were contributions by the assessee to the WWEPC as its member, following a decision taken at the meeting of the council on 14th May, 1979. Similarly, a sum of Rs. 10,952 was paid by the assessee to Handicrafts and Handloom Export Corporation (HHEC) @ 1 per cent on the export sales. Another sum of Rs. 1,850 was paid to Hosiery Exporters Association, Ludhiana (HEA).

The AO took the view that the aforesaid payments were in the nature of contribution or subscription to various agencies and did not qualify for deduction under s. 35B of the Act. The AO noticed that these expenditures were not incurred by the assessee wholly and exclusively for purposes of development of the export market under any of the sub-clause of cl. (b) of s. 35B(1) of the Act. The AO observed, after considering various sub-clauses, that there was no evidence on record to show that the payments were made wholly and exclusively for the purposes specified in the sub-clauses. The AO, therefore, did not allow deduction on the aforesaid payments under s. 35B of the Act.

The CIT(A) allowed deduction under s. 35B on the aforesaid payments. The Revenue challenged the order of the CIT before the Tribunal, but failed.

3. A similar question has been considered by the Supreme Court in CIT vs . Stepwell Industries Ltd. & Ors. : [1997]228ITR171(SC) .

4. In the light of the decision of the Supreme Court, the question is answered in the negative and in favour of the Revenue and against the assessee.