Judgment:
T. Kochu Thommen, J.
1. The following question has been, at the instance of the Revenue, referred to us by the Income-tax Appellate Tribunal, Cochin Bench :
'Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that expenses incurred by the assessee by way of customs duty paid in the United States of America are entitled to weighted deduction under Section 35B of the Income-tax Act ?'
2. The crucial point which does not appear to have been considered by the authorities below is, in our view, this :
'Did the carriage of goods end prior to the payment of customs duty at New York or was such payment made in the course of the onward journey of the goods to their final destination ?'
3. If the duty of customs was paid in New York subsequent to the termination of the carriage of goods at the instance of the assessee, as was the position in CIT v. Indo Marine Agencies (Kerala) (P.) Ltd. : [1986]158ITR604(Ker) , such duty was an allowable expenditure under Section 35B(1)(b)(iii) of the Income-tax Act, 1961. On the other hand, if the carriage of the goods at the instance of the assessee did not end at New York, but continued to the hinterland destination of the goods as was the position in K.E. Kesavan & Co. v. CIT (which is appended to our judgment in : [1986]158ITR608(Ker) ), the duty paid in the course of suchcarriage was not an allowable expenditure in terms of the aforesaid provision. This is a fact which is yet to be found, and which is required to be found, and the question referred cannot be answered until then. Accordingly, we decline to answer the question referred.
4. We direct the parties to bear their respective costs in this tax referred case.
5. A copy of this judgment under the seal of the High Court and the signature of the Registrar shall be forwarded to the Income-tax Appellate Tribunal, Cochin Bench.