Delhi H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was entitled to claim the expenditure under the head ‘carpet gifted to foreign buyer’ even though the same was hit by the provisions of r. 6B of the IT Rules, 1962?

Counsel Appeared

Misra & R.C. Pandey, for the Petitioner : K.K. Jain & Promod Dayal, for the Respondent

N. KIRPAL, J.:

The petitioner seeks reference of the following three questions to this Court :

“1.I. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was entitled to claim the expenditure under the head ‘carpet gifted to foreign buyer’ even though the same was hit by the provisions of r. 6B of the IT Rules, 1962?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee-firm was entitled to weighted deduction under s. 35B on expenditure incurred in connection with the carpet gifted to the foreign buyer ?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was entitled to weighted deduction on expenses claimed under the head ‘Packing and forwarding charges ?'”

In our opinion, question No. 1 is a pure question of fact and r. 6B is, on the face of it, not applicable because that rule applies to expenses incurred on advertisement. The finding of fact in this case is that, to a foreign customer, a carpet worth Rs. 3,000 was presented. This surely is not a case of advertisement on behalf of the assessee when, admittedly, the assessee earns a lot of income from its foreign customers.

As regards the other two questions, the interpretation of s. 35B is involved and, therefore, we direct the Tribunal to state the case and refer the aforesaid questions Nos. 2 and 3 to this Court. No order as to costs.

[Citation : 188 ITR 125]