Judgment :- 1. The following questions have been, at the instance of the revenue, referred to us by the Income-tax Appellate Tribunal, Cochin Bench: "1. Whether on the facts and in the circumstances of the case, the assessee is entitled to weighted deduction under Clauses (i) and (ii) of S.35B(1)(b) of the Income tax Act, 1961? 2. Whether on the facts and in the circumstances of the case the Tribunal is justified in holding that 'services rendered by the Agent, Nut Meat Trading Company, is not in connection with the distribution of the goods' and is not the above finding wrong and unreasonable and based on conjectures and surmises? 3. Whether on the facts and in the circumstances of the case, the Tribunal is right in law and fact in holding that 'there are services rendered by the selling agent which come under sub-clauses (i) and (ii) of S.35B(1)(b). It is these services which are remunerated only by the agent's commission' and are not the above findings wrong, unreasonable, perverse, based on surmises and baseless assertions? 4. Whether on the facts and in the circumstances of the case the assessee is entitled to claim deduction in respect of the provision made for payment of leave with wages?" 2. Question No. 4 has to be answered, in the light of the decision of this Court in Commr. of Income-tax v. Prema Laxman,1984 KLT. 417, in the affirmative, that is, in favour of the assessee and against the revenue. We do so. 3. We shall now deal with the first three questions regarding "claims under S.35B(1)(b) of the Income-tax Act, 1961 (the "Act"). These claims relate to expenses incurred by the assessee in the accounting years relevant to the assessment years 1975-76 and 1976-77. In its returns for the relevant years, the assessee claimed weighted deduction under S.35B(1)(b)(iii) and (viii). The Income-tax Officer disallowed the claims on the ground that the amounts in question were paid in India. The assessee's case was that these amounts were paid by way of commission to its agent in India in connection with goods exported to the U.S.S.R. The Officer understood the payment made in India as an expenditure incurred in India. The Income-tax Officer disallowed the claims on the ground that the amounts in question were paid in India. The assessee's case was that these amounts were paid by way of commission to its agent in India in connection with goods exported to the U.S.S.R. The Officer understood the payment made in India as an expenditure incurred in India. On appeal by the assessee, the Appellate Assistant Commissioner disallowed the claims under sub-clauses (iii) and (viii) of clause (b) of sub-s. (1) of S.35B, which provisions alone were invoked by the assessee, but allowed the claims under sub-clauses (ii), (v) and (vi) thereof. In doing so, the Appellate Assistant Commissioner followed certain earlier decisions of the Income-tax Appellate Tribunal. His decision was challenged by the revenue before the Tribunal. The Tribunal allowed the claims under sub-clauses (i) and (ii) of clause (b) of sub-s. (1) of S.35B. Referring to various provisions contained in what the Tribunal refers to as the standard form contract entered into between the assessee and the Trade Mission of the U.S.S.R., the Tribunal allowed the claims of the assessee. 4. The point at issue is whether or not the assessee has by reason of its activities earned the weighted deduction at the rates specified under S.35B. It must be remembered that deduction at one and one-third times or at one and one-half times, as the case may be, is allowed under S.35B only in respect of acts performed outside the country. The expenditure referred to in clause (a) of S.35B(1) must have been incurred wholly and exclusively for such activities as are specified under clause (b) thereof and performed abroad. We are fortified in this construction by the view expressed by the Madras High Court in CIT v. Southern Sea Foods P. Ltd., (1983) 140 ITR 855 (Mad.) and V. D. Swami & Co. Pvt. Ltd. v. CIT, (1984) 146 ITR 425 (Mad.). That court has, however, further held that it was not sufficient that the expenditure was incurred outside India, but the payment also should have been made outside India (CIT v. Southern Sea Foods P. Ltd., (1983) 140 ITR 855 (Mad.)). With respect, we do not agree. Once it is proved that the expenditure was incurred outside India wholly and exclusively for the specified activities, the assessee would not be disqualified for the deduction, even if payment towards such expenditure was actually made in India. With respect, we do not agree. Once it is proved that the expenditure was incurred outside India wholly and exclusively for the specified activities, the assessee would not be disqualified for the deduction, even if payment towards such expenditure was actually made in India. The wording of the Section, which is intended to facilitate export trade, does not justify, in our view, the narrower construction that, not only the expenditure should have been incurred outside India, but the payment also should have been made outside India. 5. The Income-tax Officer, in our opinion, did not view the question from the correct angle. We disallowed the claims for the reason that payment had been made in India. That by itself would not be a sufficient reason to disallow the claims, provided there was material to show that the payment made in India was wholly and exclusively for the expenditure incurred outside the country in respect of matters specified under clause (b). The assessee's counsel has referred to us the decision of the Delhi High Court in CIT v. Jay Engineering Works, (1984) 149 ITR 297 (Delhi) where it was held that, to attract the provisions of S.35B, it was unnecessary that the activities in question should have been performed outside India, except in regard to matters falling under sub-clauses (iii) and (iv). With respect, we do not agree. Any such construction would, in our opinion, militate against the language of the Section and defeat the legislative intent. 6. The Appellate Assistant Commissioner and the Tribunal, in our view, also erred in coming to the conclusion that merely because the assessee had paid commission to its agent in India in connection with the work which he bad done for the sale of goods to foreign buyers, the assessee was entitled to weighted deduction under the Section. What the Section requires is that the assessee must establish that the expenses were incurred outside India for the specified activities performed outside India. The burden is on the assessee to prove that fundamental fact. It is not sufficient that the assessee sold goods to foreign buyers or that it was assisted by a commission agent in connection with the sale of those goods, but the burden is on the assessee to prove that the commission paid was wholly and exclusively for the specified activities conducted outside the country. It is not sufficient that the assessee sold goods to foreign buyers or that it was assisted by a commission agent in connection with the sale of those goods, but the burden is on the assessee to prove that the commission paid was wholly and exclusively for the specified activities conducted outside the country. The object of the special concession allowed under the Section is, as we have already noticed, to facilitate export trade; and, only in regard to expenditure incurred outside the country, although paid in India, can the assessee claim the benefit. This crucial fact was lost sight of by the appellate authorities. They allowed the claims solely because the amounts had been paid to the commission agent, but without verifying whether the assessee had proved that such amounts were paid for expenses actually incurred outside India. The assessee produced no material whatever to prove this fundamental fact. The Tribunal had no evidence to decide the question. The Tribunal, in our view, misunderstood the law, and reached a conclusion without evidence to support it. It allowed the claims under provisions which the assessee had not invoked and on assumption of facts which are not in evidence. The Tribunal thus misdirected itself and its findings are vitiated in regard to the claims under S.35B (See in this connection the observation of the Supreme Court in CIT v. S.P. Jain, (1973) 87 ITR 370, 381) 7. Accordingly we answer question Nos.1 to 3 in favour of the revenue and against the assessee. 8. We direct the parties to bear their respective costs in these Tax Referred Cases. A copy of this judgment under the seal of the High Court and the signature of the Registrar shall be forwarded to the Income-tax Appellate Tribunal, Cochin Bench.