SUPREME COURT OF INDIA

Before:- B.N. Kirpal and D.P. Mohapatra, JJ.

CA 3178 of 1999. D/d. 14.5.1999.

Commissioner Of Income-Tax - Appellant

Versus

Chika Ltd. - Respondent

Sales - Outside India - Commission paid in India - Weighted deduction - Not permissible under Section 35-B - Weighted deduction under Section 35-B could not be allowed on commission paid to a party in India with regard to sales made outside India - Commissioner Income Tax v. Prakash Cotton Mills Pvt. Ltd. (Bom), relied on.

[Para 5]

Cases Referred :-

Commissioner Income Tax v. Prakash Cotton Mills Pvt. Ltd, (Bom)

Commissioner Income Tax v. Stepwell Industries Ltd..

JUDGMENT

Delay condoned.

2. Special leave granted.

3. On an application filed by the appellant, the Tribunal had referred the following question of law to the High Court :

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the assessee-company was entitled to export markets development allowance under Section 35B(l)(b) in respect of expenditure incurred for foreign indenting business even though the services in this connection were rendered in India ?

4. The High Court following its earlier decision in Commissioner Income Tax v. Prakash Cotton Mills Pvt. Ltd, (Bom), answered the question of law in favour of the respondent.

5. Dr. Gauri Shankar, learned senior counsel for the Revenue, brings to our attention that the issue now stands concluded with the judgment of this court in Commissioner Income Tax v. Stepwell Industries Ltd.. It was held in the said decision that weighted deduction under Section 35B could not be allowed on commission paid to a party in India with regard to the sales made outside India. The principle enunciated in the above said decision is clearly applicable in the present case.

6. Therefore, the appeal is allowed and the question of law is answered in favour of the Revenue.

7. No costs.

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