1. In this application the commissioner has sought a reference to this court on two question, but rule was issued at the stage of admission as regards the following question only :
'Whether, on the facts and in the circumstances of the case, the tribunal was right in law in holding that the assessee was entitled to claim weighted deduction of Rs. 43,852 under section 35B of the Income-tax Act, 1961 ?'
2. It was pointed out by the learned advocate for the assessee that the only point of law canvassed before the Tribunal was that the claim of the assessee was not admissible under section 35B since the expenses were incurred in India. This is borne out by a reference to para. 5 of the order of the Tribunal in the income-tax appeal.
3. Mr. Joshi drew our attention to the original order of the Income-tax Officer where the expenses in respect of which weighted deduction is claimed have been fully indicated. It would appear that as far as the claim in respect of export duty is concerned, there may be some substance in the contention of the revenue. If at all, such claim could be made only under the first part of the sub-clause (iii) of section 35B(1)(b) and expenses incurred in India are expressly excluded. It is found, however, that the amount of export duty in respect of which weighted deduction is claimed by the assessee and allowed comes to only Rs. 1,437. As far as other heads of expenditure are concerned, it is urged that under items other than sub-clauses (iii) there is no warrant for excluding expenditure incurred in India. it would appear that where the legislature desired to exclude the expenditure incurred in India for the purposes of giving benefit of weighted deduction to the assesee, it expressly did so by specifically mentioning such exclusion in the sub-clause, for example, in sub-clause (iii). It must follow that where this was not done, the expenditure can be incurred by the assessee either outside in India but it must pertain to the purposes mentioned in the various sub-sections, which purposes are indicated as pertaining to various activities outside India. If then as assessee under this clause claims the benefit of weighted deduction, he will have to satisfy the revenue authorities that the purpose is one which is satisfied by reference to the language of the section; and in such a case where the assessee is able to discharge this burden, he would be entitled to a weighted deduction irrespective of whether the expenditure is incurred within or without India. It is true that in respect of export duty it may follow that benefit has been allowed to the assessee without proper application of mind. But as a very small amount is involved, it appears to us to be unnecessary to make the rule absolute and invite a reference.
4. In the circumstances, the rule will stand discharged but with no order as to costs.