1. [This para is not reproduced here as it involves minor issue]. 2. next ground is regarding allowance of weighted deduction under section 35B of Income-tax Act, 1961 ('the Act') with regard to export duty. ITO in his order for 1977-78 has stated as follows: " (a) Weighted deduction on export duty of Rs. 1,34,29,740: assessee's authorised representatives consider that assessee-company is eligible for weighted deduction under sub-clause (viii). According to them, assessee is exporter supplying goods in execution of contracts and as such expenditure incurred in this respect is covered by sub-clause (viii). For this purpose, reliance is placed on terms and conditions of sale. It is argued that t h e duty paid to Government of India is wholly and exclusively for purpose of export of such goods. duty paid is at stage of contract of assessee-company and Coffee Board in India. It is in no way connected with any agreement or contract w i t h foreign buyer. export duty paid by assessee-company represents its selling price in India. As such, this item of expenditure cannot be treated as one entitled to weighted deduction under any of sub-clauses. " Before Commissioner (Appeals) it was urged on behalf of assessee that said expenditure had been incurred at point of shipment of coffee and not at time of signing contract with Coffee Board, and as such it was expenditure incurred in connection with or incidental to supply of goods outside India. Reliance was also sought to be placed on some decisions of Tribunal at Bombay. Commissioner (Appeals) held as follows: " 3. After careful consideration of all facts of case I am of opinion that weighted deduction has to be allowed on export duty paid. In coming to conclusion that appellant is not entitled to weighted deduction, Income-tax Officer has obviously proceeded on wrong premises. It is not correct to say that duty is paid at time or contract between appellant company and Coffee Board. From evidence produced before me, it is clear beyond doubt that payment of export duty has got nothing to do with contract with Coffee Board. shipping bills make it very clear that duty is paid at point of shipment of coffee. In other words, duty is paid just before commodity leaves shores of India. Hence, Income-tax Officer erred in his observation that duty is paid when contract is signed with Coffee Board. Income-tax Officer also erred in his presumption that export duty represents selling price in India. This does not represent selling price in India, because, appellant does no business in India and besides, as stated earlier, duty is paid at point of shipment of coffee. As regards Income-tax Officer's observation that payment is not connected with agreement or contract with foreign buyer, as stated earlier, export of coffee is not permitted without payment of duty and to that extent it can be said that it is connected with agreement or contract entered by appellant with foreign buyer. payment of export duty is directly connected with export of coffee. This is statutory payment without which, coffee cannot be exported. In circumstances, I agree with appellant's claim that weighted deduction has to be allowed under sub-clauses (iii) and (viii) of clause (b) of section 35B(1). appellant also points out that similar claim has been allowed in two cases by Income-tax Appellate Tribunal Bombay, reported in Taxes and Planning issue of 15-9-1977 on page 19 and April 1978 issue of same publication, on page 374. I, therefore, direct Income- tax Officer to allow weighted deduction on sum of Rs. 1,34,29,740. " revenue is in appeal. 3. learned standing counsel for department raised preliminary objection that assessee had not objected to denial of relief under section 35B with regard to export duty during proceedings under section 144B of Act and, therefore, Commissioner (Appeals) ought not to have admitted this ground. However, this ground does not find place in grounds of appeal filed by revenue on 7-11-1981. Further, it is seen that this is legal contention raised on basis of facts on record. We, therefore, hold that Commissioner (Appeals) was justified in entertaining this ground. 4. standing counsel for revenue pointed out that claim before ITO was under section 35B(1)(b)(viii). Before Commissioner (Appeals) t h e claim was both under sub-clauses (iii) and (viii). He submitted that expenditure on export duty could not be equated with that incurred in performance of services outside India in connection with or incidental to execution of any contract for supply outside India of such goods, services or facilities. It could not also be allowed under sub-clause (iii) since it was expenditure incurred in India. He submitted that decision of Karnataka High Court in Ullal Narayana Mallya & Sons's case with regard to freight and insurance charges would apply with equal force in case of export duty also. In Ullal Narayana Mallya & Sons' case having regard to amendment of section 35B(1)(b)(iii) in 1970, claim under sub-clause (iii) was given up. assessee sought to rely on sub-clause (viii). Court held that sub-clause (viii) would apply only to after-sale service in outside countries having regard to meaning of words 'ancillary or incidental to trade or business'. learned standing counsel submitted that High Court judgment had placed matter beyond doubt and assessee's claim for weighted deduction on export duty was clearly untenable. 5. learned counsel for assessee submitted that export duty was not covered by Karnataka High Court judgment. Bombay High Court in case of Universal Ferro & Allied Chemicals Ltd. v. P.G.K. Warrier [1983] 143 ITR 959 had questioned correctness of decision of Special Bench in J.H. & Co. v. Second ITO [1982] 1 SOT 150 (Bom.). For this reason, cases involving similar claims were being remitted back to ITOs by Bombay Benches of Tribunal. In this case, export duty was paid in connection with execution of contract for supply of goods outside India. contract could not be fulfilled unless export duty was paid. This was not part of cost of goods. expenditure being for purpose of facilitating supply of goods outside India has to be treated on par with other expenditure of same nature such as advertisement, publicity, commission, salary to export staff, passage, etc. It was, thus, pleaded that order of Commissioner (Appeals) in this behalf should be upheld. In alternative, plea was made to constitute Special Bench. 6. We do not feel that it is necessary to constitute Special Bench for resolving this dispute. Special Bench of Tribunal has already given resolving this dispute. Special Bench of Tribunal has already given decision in this behalf which, however, has not been accepted by one of High Courts, with regard to weighted deduction on freight, port trust certification charges, etc. On same issue, Karnataka High Court has held in favour of revenue. It, therefore, remains for us to examine whether export duty is to be treated on par with expenses on carriage, freight, etc., or not. argument that export duty paid was expenditure incurred wholly and exclusively in connection with or incidental to execution of any contract for supply outside India of goods is fallacious. logic that unless export duty was paid goods could not be sent out of ports to foreign countries and as such duty is expenditure incurred wholly and exclusively in connection with contract for supply outside India of goods is untenable. If above logic were correct, even cost of goods and expenditure incurred on freight would qualify for weighted deduction. Unless assessee produces goods, he cannot export them. Unless he carries them to port, goods cannot be exported. That way, every expenditure incurred by assessee would have to be given relief under section 35B(1) and prohibitions contained in section 35B(1)(b)(iii) and (viii) against allowance of weighted deduction on expenditure incurred in India would be rendered otiose. There is no dispute that export duty is expenditure incurred in India. first portion of section 35B(1)(b)(iii) reads as follows: " 35B(1)(b) expenditure referred to in clause (a) is that incurred wholly and exclusively on-- (iii) distribution, supply or provision outside India of such goods, services or facilities, not being expenditure incurred in India in connection there with... " [Emphasis supplied] Therefore, expenditure incurred in India in connection with supply of goods outside India is clearly not entitled to weighted deduction under section 35B(1)(b)(iii). 7. We now examine assessee's claim under section 35B(1)(b)(viii). clause reads as follows: " 35B(1)(b) expenditure referred to in clause (a) is that incurred wholly and exclusively on-- (viii) performance of services outside India in connection with, or incidental to, execution of any contract for supply outside India of such goods, services or facilities; " Karnataka High Court explained implications of this sub-clause in detail in case of Ullal Narayana Mallya & Sons. Though they were examining allowability of assessee's claim under section 35B with regard to freight charges which assessee claimed was permissible under sub-clause (viii), observations would apply with equal force to claim for weighted deduction on export duty also, for simple reason that assessee has based its claim on sub-clause (viii). Paragraphs 9, 10, 11 and 12 of judgment would make position clear. These are as follows: " 9. question for decision is whether activities performed by assessee in matter of shipment of goods at Indian ports to foreign destinations, obtaining bills of lading, payment of freight, whether in Indian currency or foreign currencies, preparations of bills of exchange and presentation of bills with necessary shipping documents to foreign buyers or their agents for payment, constitute 'performance of service in connection with or incidental to' execution of contracts for supply of cashewnut, kernel or cashew shell oil outside India. Section 35B as amended by Act 19 of 1970 reads: 35B. Export market development allowance.--(1)(a) Where assessee, being domestic company or person (other than company) who is resident in India, has incurred after 29th day of February, 1968, whether directly or in association with any other person, any expenditure (not being in nature of capital expenditure or personal expenses of assessee) referred to in clause (b), he shall, subject to provisions of this section, be allowed deduction of sum equal to one and one-third times amount of such expenditure incurred during previous year: (b) expenditure referred to in clause (a) is that incurred wholly and exclusively on-- (i) advertisement or publicity outside India in respect of goods, services or facilities which assessee deals in or provides in course of his business; (ii) obtaining information regarding markets outside India for such goods, services or facilities; (iii) distribution, supply or provision outside India of such goods, services or facilities, 'not being expenditure incurred in India in connection therewith or expenditure (wherever incurred) on carriage of such goods to their destination outside India or on insurance of such goods while in transit'; (iv) maintenance outside India of branch, office or agency for promotion of sale outside India of such goods, services or facilities; (v) preparation and submission of tenders for supply or provision outside India of such goods, services or facilities, and activities incidental thereto; (vi) furnishing to person outside India samples or technical information for promotion of sale of such goods, services or facilities; (vii) travelling outside India for promotion of sale outside India of such goods, services or facilities, including travelling outward from, and return to, India; (viii) performance of services outside India in connection with, or incidental to, execution of any contract for supply outside India of such goods, services or facilities; (ix) such other activities for promotion of sale outside India of such goods, services or facilities as may be prescribed.' Note: clause 'not being expenditure incurred in India in connection therewith or expenditure (wherever incurred) on carriage of such goods to their destination outside India or on insurance of such goods while in transit' shown within inverted commas in sub-clause (iii) of sub-section (1)(b) of section 35B was added retrospectively by section 8 of Act 19 of 1970. In view of amendment retrospectively made to sub-clause (iii), Shri Viswanatha Iyer did not contend that assessee's claim falls under said sub-clause. His case was that claim falls under sub-clause (viii). view of Tribunal was that acts of assessee in shipping goods are essential parts in execution of contract itself and they are not acts performed in connection with or incidental to same. 10. In our opinion, what is contemplated by sub-clause (viii) is rendering of after-sales service by assessees marketing their goods outside India. It is common knowledge that manufacturers back up their sales with after- sales service and for that purpose provide network of service centres or authorised dealers service stations. To sale they attach service policy which entitles buyer to free warranty service for period of warranty and even after expiry of warranty period, service by expert technicians employed by manufacturers. To give illustration, well known manufacturers of Kirloskar engines, say in their advertisements for their engines that their engines have backing of countrywide service network of distributors to deliver to their customers genuine spare parts and render after-sales service. Remington Company which manufactures typewriters and electric shavers issues service policies when it sells typewriters or electric shavers manufactured by it. company has Remington Factory service centres and authorised dealers service stations all over world. These service stations provide free servicing during warranty period, and thereafter, supply genuine spare parts, and also service at lowest possible cost. This is pattern of trade today. Manufacturers of goods, particularly, light engineering goods back up their sales with after-sales service. Indian exports of such goods to countries outside India can capture markets only if they provide after-sales service for which they may have to set up factory service centres or authorised dealers service stations. Exporters have necessarily to incur expenditure in providing after-sales service in outside countries. It is such expenditure that is covered by sub-clause (viii). 11. words 'in connection with' or 'incidental to' in sub-clause (viii) have to be given effect to. word 'incidental' has same meaning as 'ancillary'. Stroud's Judicial Dictionary (Third Edition, Volume I, at page 135) says: ' work is 'ancillary or incidental' to trade or business when it is not necessary thereto or primary part thereof... ' decision of Court of Appeal in Pearce v. London & South Western Railway [1900] 2 QB 100 has been relied on. word 'connect' means to joint or attach. Therefore, words 'connected with' cannot take antecedent acts which are necessary or primary part in execution of contract of sale or supply of goods outside India. 12. assessee's contracts were CIF contracts under which it had to ship goods at Indian ports to foreign destinations. loading of goods on board ships at Indian ports obtaining bills of lading, payment of freight and presentation of bills of exchange with shipping documents to foreign buyers or their agents, are all necessary acts done in execution of contracts for supply of goods outside India. It is not case of assessee that it has rendered any after-sales service in respect of goods supplied outside India. Therefore, view taken by Tribunal in our judgment, is right. Accordingly, we answer question referred in affirmative and against assessee. " It is, therefore, obvious that export duty cannot be considered as expenditure incurred in connection with or incidental to execution of any contract for supply outside India of coffee. We, accordingly, reverse order of Commissioner (Appeals) in this behalf. 8 to 10. [These paras are not reproduced here as they involve minor issues.] *** INCOME TAX OFFICER v. M.S.P. EXPORTS (P) LTD.