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Commissioner of Income-tax (Central) Vs. Piramal Spinning and Weaving Mills Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberIncome-tax Application No. 4 of 1979
Judge
Reported in[1980]124ITR408(Bom)
ActsIncome Tax Act, 1961 - Sections 35B and 256(2)
AppellantCommissioner of Income-tax (Central)
RespondentPiramal Spinning and Weaving Mills Ltd.
Appellant AdvocateR.J. Joshi, Adv.
Respondent AdvocateS.E. Dastur, Adv.
Excerpt:
- .....sum of rs. 18,98,413 was paid by the respondents to the 'indian cotton mills' federation for their export fund. this fund was constituted by the said federation, inter alia, for prompting export of cotton textile products, giving incentives, monetary or otherwise, as may, in consultation with the textile commissioner be decided upon by the committee of the said federation from time to time, to the manufacturers, processors and exporters of cotton textile product with a view to prompting the export of such products, for sending representatives or trade delegations abroad for any work connected with the promotion of exports of cotton textile products and bearing the entire or such proportion of expenses incurred in connection therewith as may be determined from time to time by the said.....
Judgment:

Madon, J.

1. By this application under s. 256(2) of the I.T. Act, 1961, the Commissioner of Income-tax, who is the petitioner, desires that this High Court should direct the Income-tax Appellate Tribunal to state a case and refer to this court the following question :

'Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the assessee was entitled to weighted deduction under s. 35B of the Income-tax Act, 1961, at 20% of Rs. 18,98,413 ?'

2. The said sum of Rs. 18,98,413 was paid by the respondents to the 'Indian Cotton Mills' Federation for their Export Fund. This fund was constituted by the said Federation, inter alia, for prompting export of cotton textile products, giving incentives, monetary or otherwise, as may, in consultation with the Textile Commissioner be decided upon by the committee of the said Federation from time to time, to the manufacturers, processors and exporters of cotton textile product with a view to prompting the export of such products, for sending representatives or trade delegations abroad for any work connected with the promotion of exports of cotton textile products and bearing the entire or such proportion of expenses incurred in connection therewith as may be determined from time to time by the said committee and for incurring expenses in carrying on propaganda or publicity in India or abroad for the purpose of prompting exports of cotton textile products. Under r. 5 of the Rules of the said Fund, out of this fund, payments were to be made to manufacturers, processors and exporters in respect of exports of cotton textile products. Under r. 6.2, the committee of the said Federation is to decide from time to time as to the portion of the total expenses incurred by the Federation as shall be attributable to expenses for the administration of the said Fund for carrying out the work of calculating and disbursing export incentives and for carrying out any of the objects of the Fund, and on such determination by the said committee, the amount was to be debited the said Fund.

3. In addition to the said sum of Rs. 18,98,413, the respondents had also paid to the said Fund a sum of Rs. 1,65,163 for spindle/loom fees and a brokerage on export sales in the sum of Rs. 19,980. The ITO granted weighted deduction under s. 35B of the Indian I.T. Act in respect of one-third of the amount of such spindle/loom fees and for brokerage paid on export sales. He, however, disallowed the weighted deduction claimed on the said sum of Rs. 18,98,413 on the ground that the said amount was paid for import of cotton and it could not be considered as expenditure for promotion or development of export markets. On appeal by the respondents, the AAC held that the said sum of Rs. 18,98,413 was not paid to the said Fund only for the import of cotton, but was also paid in order to meet the expenditure incurred by the said Federation in respect of other objects for which the fund was created. The relevant objects, we have set out above, of which all except the second would fall under s. 35B. The AAC therefore, estimated the amount which would be spent by the said Federation for these objects at 40% of the said sum of Rs. 18,98,413. Thereupon, the department filed an appeal to the Tribunal and after considering the facts and the materials on the record before it, the Tribunal came to the conclusion that the amount which should be allowed as weighted deduction to the respondents was 20% of the said sum of Rs. 18,98,413. Thereupon, the department filed an application under s. 256(1) of the I.T. Act, challenging the correctness of the Tribunal's decision with respect to the quantum of percentage which the Tribunal had allowed by way of weighted deduction to the respondents. The said application was dismissed by the Tribunal on the ground that the petitioner had not challenged the finding of the Tribunal that the respondents were entitled to weighted deduction under s. 35B and all that they had challenged was the percentage of the said sum of Rs. 18,98,413 to be allowed by way of weighted deduction to the respondents. The Tribunal held that this was a question of fact and, therefore, the question did not require to be referred to the High Court. We are in agreement with this findings of the Tribunal. The percentage of the said sum of Rs. 18,98,413 which should be allowed to the respondents by way of weighted deduction is really a question of estimation to be arrived at on the facts and the materials on the record and does not give rise to any question of law.

4. For the reasons set out above, we dismiss this application and discharge the rule with costs.


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