High Court Of Madras
Engine Valves Ltd. vs. CIT
Sections 35B, 40(c)
Asst. Year 1980-81
R. Jayasimha Babu & A.K. Rajan, JJ.
Tax Case Nos. 1291 & 1292 of 1986
12th November, 2001
Counsel Appeared
ORDER
R. JAYASIMHA BABU, J. :
The assessee had changed its previous year for the asst. yr. 1980-81, from 31st March, to 30th Sept., 1979. The income considered for assessment for that year was for a period of 18 months. The assessee’s claim that the specification of the sum of Rs. 72,000 under s. 40(c) of the Act be increased by 50 per cent, on the ground that the limit specified in that section was normally meant to apply only to cases where the previous year did not exceed.
12 months, was rejected uniformly by the AO, the appellate authority and the Tribunal. The first question referred to us at the instance of the assessee is regarding the correctness of that holding of the Tribunal. The language of s. 40(c) is clear. It, inter alia, provides that the deduction in respect of the aggregate of the expenditure and allowance referred to in that section in respect of any one person referred to in sub-cl. (1) shall, in no case, exceed Rs. 72,000. The statutory provision thus limits the amount to Rs. 72,000, where the period exceeds eleven months comprised in the previous year. The specification of the ceiling is not limited to previous years, which comprise only eleven months or less. It applies to all previous years, the duration of which exceeds eleven months. The fact that in the case of the assessee the previous year extended to 18 months is, therefore, not a ground for applying a ceiling different from the one specified in the statute.
The assessee’s argument that the situation in which the assessee is now placed is not one which has been visualised by the Parliament, does not enable the assessee to claim that the provision should be rewritten to achieve what the assessee regards as the true purpose of the provision by ignoring the statutory language. Such an exercise is impermissible. The Court is required to read the language of the statute as it is and give effect to it, having regard to the context in which it is used, the purpose it seeks to achieve and the meaning of the words employed to express the intent of the legislature. The first question is answered against the assessee. The assessee had also claimed weighted deduction under s. 35B in respect of the expenditure that had been incurred by it on the visit of a delegation from Yugoslavia and on the export inspection fee. The assessee claimed that it had spent a sum of Rs. 5,000 on the occasion of the visit of the delegation and had incurred an expenditure of Rs. 19,760 as export inspection fees. Those claims had been disallowed by the Tribunal and the authorities below. The second question concerns correctness of such disallowance. With regard to the expenditure on the visit of the delegation, the Tribunal has in its order observed that there was no material on record to indicate the purpose for which the delegation visited India and that there was also no evidence to establish any connection between the delegation and the export business of the assessee. The rejection of the assessee’s claim with regard to the expenditure incurred by it on the visit of the delegation, therefore, was fully justified. As regards the inspection fees, an expenditure which the assessee’s office was required to incur while effecting the export, that amount was indeed entitled to weighted deduction. This Court in the case of Lucas TVS Ltd. vs. CIT (1997) 140 CTR (Mad) 168 : (1997) 224 ITR 282 (Mad) : TC S24.2483, has held that export agency inspection fee paid by an assessee for the purpose of obtaining the inspection certificate, which was a necessary requirement for the export of goods was an expenditure in respect of which the assessee is entitled to weighted deduction under s. 35B(1) (b)(vi). The Tribunal was in error in not allowing that deduction. The second question, therefore, is answered partly in favour of the Revenue with regard to the expenditure incurred on the visit of the Yugoslavian delegation and partly in favour of the assessee viz., the expenditure incurred by the assessee on the export inspection fee, which expenditure shall be entitled to weighted deduction under s. 35B.
[Citation : 256 ITR 449]
