Judgment :- N.V. BALASUBRAMANIAN, J. Pursuant to the directions of this Court in TCP No. 15 of 1984, the Tribunal referred the following questions of law under s. 256(2) of the IT Act, 1961 (hereinafter referred to as the 'Act') : "(1). Whether, on the facts and in the circumstances, the Tribunal was right in holding that weighted deduction under s. 35B should be allowed on the export promotion of Rs. 20, 587 and foreign delegate expenses of Rs. 64, 420 even though there was element of entertainment in the said expenditure ? 2. Whether, on the Tribunal's view that weighted deduction under s. 35B should be allowed even though the expenditure was not allowable under the other provisions of the Act, is sustainable in law ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that Royalty on export sales would qualify for weighted deduction under s. 35B ?" 2. The assessee is a public limited company engaged in the business of manufacture of tyres. The assessment for the asst. yr. 1976-77 was completed on 24th September, 1979 determining the total income at Rs. 1, 01, 85, 450 as against the returned income of Rs. 6, 44, 270. The assessee claimed before the ITO that the assessee is entitled to weighted deduction under s. 35B of the Act in respect of the export promotion expenses of Rs. 20, 587 and the expenses incurred on foreign delegates in a sum of Rs. 64, 420. The ITO held that the assessee was not entitled to weighted deduction in respect of both the items on the ground that they were in the nature of entertainment expenditure. However, he allowed a sum of Rs. 10, 000 towards the claim of the assessee for weighted deduction. He also disallowed the weighted deduction on royalty paid on export sales. 3. The assessee preferred an appeal to the CIT(A) against the order of assessment made by the ITO. The CIT(A) found that the break-up of Rs. 20, 587 claimed under the head 'export promotional expenses' consisted of hotel expenses for stay of foreign customers and delegates., and the expenditure incurred towards tourist taxies for foreign customers. In so far as the amount of Rs. 64, 420 was concerned, it was found that a sum of Rs. The CIT(A) found that the break-up of Rs. 20, 587 claimed under the head 'export promotional expenses' consisted of hotel expenses for stay of foreign customers and delegates., and the expenditure incurred towards tourist taxies for foreign customers. In so far as the amount of Rs. 64, 420 was concerned, it was found that a sum of Rs. 57, 079 was incurred towards the hotel expenses and other incidental expenses on their delegates from USSR and Yugoslavia and a sum of Rs. 7, 341 was incurred towards the cost of gift articles, presentation of articles to the foreign customers and delegates. The CIT(A) held that the expenses had been incurred for the purpose of export and, therefore, the assessee was entitled to weighted deduction in respect of both the amounts. He also held that the mere fact that the provisions of s. 37 of the Act restricted the allowability of the expenditure in respect of entertainment expenditure would not stand in the way of the assessee claiming the weighted deduction as the entire expenditure falls under s. 35B of the Act. In so far as the claim of the assessee for weighted deduction for royalty paid on export sales is concerned, he held the royalty paid on export sales would also qualify for weighted deduction under s. 35B of the Act. 4. Dissatisfied with the order of the CIT(A), the Department carried the matter in appeal to the Tribunal. The Tribunal held that a sum of Rs. 20, 587 was incurred towards contribution for joint publicity programme in foreign countries and the expenditure was incurred with a view to secure export orders. In so far as the sum of Rs. 64, 420 was concerned, the Tribunal held that the expenditure was customary and was incurred with the sole object of securing export orders and developing export market. The Tribunal also held that the view of the CIT(A) holding that s. 35B is an independent section and the restriction found in s. 37 of the Act would not apply for the allowability of the weighted deduction under s. 35 of the Act was correct. In so far as the claim for weighted deduction on the royalty amount paid relating to the production of the goods is concerned, the Tribunal following its earlier order held that the assessee was entitled to weighted deduction on the royalty amount also. In so far as the claim for weighted deduction on the royalty amount paid relating to the production of the goods is concerned, the Tribunal following its earlier order held that the assessee was entitled to weighted deduction on the royalty amount also. In this view of the matter, the Tribunal dismissed the appeal preferred by the Department as regards the claim of the assessee for weighted deduction under s. 35B of the Act. 5. The Revenue being aggrieved sought for a reference and in pursuance of the direction of this Court, three questions of law set out above have been referred for our consideration. 6. The answer to the third question of law need not detain us as the issue raised in the question is covered against the assessee by the decision of this Court in CIT vs. Madras Rubber Factory Ltd. 1983 wherein this Court held that the assessee was not entitled to weighted deduction on the royalty paid on export sales. Following the said decision of this Court in the assessee's own case, we hold the Tribunal was not correct in holding that the assessee was entitled to weighted deduction on royalty paid. Accordingly, the third question of law referred to us is liable to be answered in favour of the Revenue. 7. Questions 1 and 2 can be considered together and we have set out the necessary facts earlier. 8. Mr. C. V. Rajan, learned counsel for the Revenue, submitted that the expenditure incurred by the assessee does not fall within any of the clauses of 35(b)(1)(b) of the Act and he submitted that both the CIT(A) as well as the Tribunal have not indicated or specified under which clause the expenditure would fall to qualify for weighted deduction under s. 35B of the Act. He strongly placed reliance on the decision of the Supreme Court in CIT vs. Stepwell Industries Ltd. and CIT vs. Hero Cycles and submitted that the onus is on the assessee to prove that the expenditure incurred would qualify for weighted deduction. In fairness, Mr. He strongly placed reliance on the decision of the Supreme Court in CIT vs. Stepwell Industries Ltd. and CIT vs. Hero Cycles and submitted that the onus is on the assessee to prove that the expenditure incurred would qualify for weighted deduction. In fairness, Mr. C. V. Rajan, learned counsel for the Revenue brought to our attention the decision of the Punjab & Haryana High Court in the case of CIT vs. Hansa Agencies (P) Ltd. 1997 143 CTR (P&H) 162 wherein the Punjab & Haryana High Court has taken the view that the expenditure incurred on foreign buyers would qualify for the weighted deduction under s. 35B of the Act. He also submitted that if the nature of the expenditure is closely examined, it would be entertainment expenditure and since it is not allowable under s. 37 of the Act, the same cannot be allowed under s. 35B of the Act. 9. Mr. P. P. S. Janarthana Raja, learned counsel for the assessee, on the other hand, submitted that though the Tribunal has not positively specified the sub-clause under which the expenditure would fall, the Tribunal has clearly indicated that the expenses were incurred with a view to secure export orders and for joint publicity programme in foreign countries and the nature of the expenditure would show that they fall under sub-cl. (ii) of cl. (b) of sub-s. (1) of the Act as expenses were incurred by the assessee to obtain the information regarding market outside India and without obtaining the information regarding market outside India, it is well-nigh impossible for the assessee to obtain the export orders and therefore, the assessee has incurred the expenditure for the promotion of sales outside India and there is a close nexus between the expenditure incurred by the assessee and the export activities carried on by the assessee. Learned counsel for the assessee submitted that the Tribunal was correct in holding that the assessee was entitled to weighted deduction with reference to the amounts claimed by the assessee and s. 35B is an independent section and the restriction found in s. 37 of the Act cannot be imported in the construction of s. 35B of the Act. 10. We have carefully considered the submissions made by learned counsel for the parties. We have also set out the facts in detail. 10. We have carefully considered the submissions made by learned counsel for the parties. We have also set out the facts in detail. The Tribunal, after considering the nature of the expenditure found that the object of expenditure was contribution towards a joint publicity programme in the foreign countries and with a view to secure export orders. The Tribunal also found that the sole object with which the expenditure was incurred was to develop export market sales and it is in the light of the finding given by the Tribunal, the question whether the assessee is entitled to weighted deduction under s. 35B of the Act has to be considered. Sec. 35B(1)(b)(ii) of the Act, in so far as it is relevant for the purpose of the case, reads as under : "obtaining information regarding markets outside India for such goods, services or facilities". A fair reading of the above provision indicates that where the assessee has incurred expenditure for obtaining information regarding market outside India, the expenditure would qualify for weighted deduction under s. 35B of the Act. The assessee has incurred the expenditure on certain delegates, who came from USSR and Yugoslavia and the expenditure incurred was towards hotel and incidental charges and some amount was incurred towards the presentation of the gift articles to the foreign delegates. The other portion of the expenditure was incurred towards the taxi charges and the finding of the authority is that they cannot be regarded as entertainment expenditure at all. We are of the view that the assessee had incurred the expenditure with a view to obtain information regarding market outside India as the expenditure was incurred only with the object of securing export orders. The purpose of the expenditure clearly shows that the assessee has incurred the same to get information regarding market outside India, and without that vital information in possession regarding the market outside India, it is not possible for the assessee to secure export orders. It is implicit in the nature of the expenditure, which were incurred to secure export orders, that the assessee has incurred the same for obtaining the information regarding market outside India, as the first stage for securing export orders is to obtain information regarding market outside India, and it is only thereafter, in second stage the assessee to be getting the export orders would arise. Therefore, we are of the view that the expenditure incurred will fall under sub-cl. (ii) of cl. (b) of sub-s. (1) of s. 35B of the Act as there is a link between the expenditure incurred with the object of exporting items and obtain information regarding markets outside India as such. Though the Tribunal has not recorded a positive finding that the expenditure would fall under cl. (ii) of s. 35B of the Act, still from the finding of the Tribunal, it is clear that the Tribunal had in mind only sub-cl. (ii) of s. 35B(1) of the Act, as without such a view, it would not have been possible for the Tribunal to hold that the assessee was entitled to weighted deduction. 11. That apart, we have seen the ITO has not disallowed the entire claim of the assessee but he restricted and disallowed the claim of the assessee only to a portion of the amount claimed by the assessee. The fact that a portion of the expenditure was held to be allowable gives an indication that the Department was also of the opinion that the expenditure would fall within any one of the clauses of s. 35B(1)(b) of the Act. 12. In addition thereto, the question whether the expenditure incurred on the foreign delegates would qualify for weighted deduction came up for consideration before the Calcutta High Court in CIT vs. Bata India Ltd. where certain expenses were incurred by the assessee therein towards the visiting personnel from foreign countries in connection with the conference in India for promotion of the export and the Calcutta High Court held that the assessee was entitled to deduction on the export promotion expenses and the following observations are relevant for the purposes of the case : "The activities mentioned in sub-cls. (i) to (iii) do not cease to be activities for the promotion of the sale outside India of such goods, services or facilities because the expression "activities for promotion of sale outside India" has not been specifically used in any of these sub-clauses. (i) to (iii) do not cease to be activities for the promotion of the sale outside India of such goods, services or facilities because the expression "activities for promotion of sale outside India" has not been specifically used in any of these sub-clauses. Advertisement or publicity outside India in respect of goods, services or facilities, obtaining information regarding markets outside India for such goods, services or facilities, distribution, supply or provision outside India of such goods, services or facilities, maintenance outside India of a branch office or agency for the promotion of the sale outside India of such goods, services or facilities or for carriage of goods to their destination outside India or insurance of goods in transit, maintenance of a branch office or agency for export promotion, preparation and submission of tenders for supply and provision outside India of such goods, services or facilities, furnishing samples or technical information outside India for promotion of export sale, foreign travel for promotion of sale outside India, actual performance of services outside India in connection with the execution of any contract for supply outside India of goods, services or facilities are all instances of "activities for the promotion of sale outside India" of goods, services or facilities". 13. A similar question came up before the Karnataka High Court in CIT vs. Hindustan Machine Tools and the Karnataka High Court held the expenditure incurred should be regarded as one incurred for obtaining information regarding market outside India, as there was a direct nexus between the expenditure incurred and promotion of export. 14. The Tribunal in the instant case found that there was a nexus between the expenditure of the export activity carried on by the assessee and it found that the expenditure was incurred with a view to secure export orders and for joint publicity programme in foreign countries. The joint publicity programme in the foreign countries would be only with a view to get information regarding market outside India, and therefore, the expenses incurred would fall under sub-cl. (ii) of cl. (b) of sub-s. (1) of s. 35B of the Act. 15. The Punjab & Haryana High Court in the case of Hansa Agencies (P) Ltd. cited supra also has taken the view that the expenditure incurred on foreign buyers was eligible for weighted deduction on the ground that the expenses were incurred for encouraging, promoting and developing export market. (b) of sub-s. (1) of s. 35B of the Act. 15. The Punjab & Haryana High Court in the case of Hansa Agencies (P) Ltd. cited supra also has taken the view that the expenditure incurred on foreign buyers was eligible for weighted deduction on the ground that the expenses were incurred for encouraging, promoting and developing export market. Though the Punjab & Haryana High Court has taken the view that it would fall under sub-s. (ix) of cl. (b) of sub-s. (1) of s. 35B of the Act, we are of the view that in the instant case, the expenses would fall under sub-cl. (ii) of cl. (b) of sub-s. (1) of s. 35B of the Act. Since the consistent view of all the High Courts is that, the assessee is entitled to weighted deduction on the expenditure incurred on the foreign delegates towards the hotel expenses, taxi charges and presentation of gift articles, we are inclined to follow the decisions of the other High Courts and hold the assessee is entitled to weighted deduction in respect of both the sums claimed. 16. The other contention of Mr. C. V. Rajan, learned counsel for the Revenue that the assessee is not entitled to weighted deduction because the expenditure incurred by the assessee is not allowable under s. 37 of the Act, requires to be considered. We are of the view that ss. 37 and 35B of the Act are two independent sections and the mere fact that a particular expenditure may not be fully allowable or allowable subject to certain conditions under s. 37 of the Act would not stand in the way of the assessee claiming the deduction under s. 35B of the Act if the assessee has satisfied the conditions prescribed under s. 35B of the Act. In our view, both the sections operate in independent fields and the restriction found in s. 37 of the Act cannot be automatically imparted or imposed while considering the claim under s. 35B of the Act. We are, therefore, of the view that merely because a portion of the expenditure may not be allowable under s. 37 of the Act would not disentitle the assessee to claim the benefit of s. 35B of the Act, if the conditions of s. 35B are complied with. Accordingly, first two questions are also liable to be answered against the assessee. 17. Accordingly, first two questions are also liable to be answered against the assessee. 17. We answer the questions of law as under : First question is answered in the affirmative and against the Revenue. Second question is answered in the affirmative and against the Revenue. Third question is answered in the negative and in favour of the Revenue. In view of the divided success, there will be no order as to costs.