The activities mentioned in Sub-clauses (i) to (viii) of Section 35B(1)(b) are also activities for the purpose of promotion of sale outside India.

( 1 ) THIS is a case where the Commissioner has come up on reference on the following question :"whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that if the purpose of the conference held in India was promotion of exports, the expenses on the conference qualified for weighted deduction under Section 35b of the Income-tax Act, 1961, notwithstanding that the expenses were incurred in India ?"

( 2 ) THE assessment year involved is 1972-73 for which the relevant year of account is the calendar year 1971. The assessee claimed that it held a con-ference at Calcutta for promotion of export styled "export for 1971". For this, the assessee incurred an expenditure of Rs. 2,60,000 for visiting personnel from foreign countries in connection with the conference. In the course of the assessment proceedings, the assessee claimed that it was entitled to weighted deduction in respect of expenses incurred under Section 35b of the Income-tax Act, 1961, ("the Act" ). The Income-tax Officer asked for particulars of the conference that was held and came to the conclusion that it was in the nature of a routine programme and he did not accept the assessee's contention that the conference was held for promotion of export. He, therefore, rejected the assessee's claim for weighted deduction.

( 3 ) THE Appellate Assistant Commissioner was of the view that it was unnecessary to go into the question whether the conference was held for the purpose of export promotion inasmuch as the expenses on which the weighted deduction had been claimed were incurred entirely in India. Under Section 35b, the assessee was not entitled to any deduction in such a case.

( 4 ) THE Tribunal, on further appeal, following the principles laid down by another Bench of the Tribunal passed in IT Appeal No. 1400 (Bom) of 1972-73, held that, for the purpose of obtaining weighted deduction under Section 35b, it was not necessary that the activities should be carried but outside India or that the expenses must be incurred outside India. The Tribunal held that the Appellate Assistant Commissioner was wrong in holding that the assessee was not entitled to weighted deduction as the conference was held in India and the expenditure was incurred in India. The Tribunal ordered "we, therefore, set aside the order of the Appellate Assistant Commissioner and send the matter back to him to decide whether the expenses claimed by the assessee were incurred for the purpose of export promotion and, if so, to allow weighted deduction to the assessee".

( 5 ) IT appears from Section 35b, as it stood at the material time, that for the purpose of obtaining weighted deduction, the expenditure had to be incurred wholly and exclusively on the objects mentioned in Sub-clauses (i) to (viii) of Sub-section (1) (b) of the section. Sub-clause (ix) of subsection (1) (a) is a residual clause which provides for weighted deduction of expenditure incurred wholly and exclusively on "such other activities for the promotion of the sale outside India of such goods, services or facilities as may be prescribed. ".

( 6 ) MR. Moitra, appearing for the Revenue, has not seriously disputed the proposition that weighted deduction cannot be refused merely because expenditure was incurred in India. Among the various clauses under Sub-section (1) (b) of Section 35b, only Sub-clause (iii) specifically provides that the expenditure that qualified for weighted deduction in connection with distribution, supply or provision outside India of such goods, services or facilities will not include expenditure incurred in India in connection therewith. It has, however, been made specifically clear in that very subsection that expenditure on the carriage of such goods to their destination outside India or on the insurance of such goods while in transit will have to be granted weighted deduction wherever the expenditure was incurred.

( 7 ) MR. Moitra argued that Sub-clause (ix) whic