common point involved in these appeals is about weighted deduction under section 35B of Income-tax Act, 1961 ('the Act'), on interest paid to banks on (i) packing loan and export bills, (ii) bank charges incurred on exports, and (iii) shipping expenses including fee for quality certificate and fumigation certificate. assessee has not been successful before authorities below and is in appeal before us. 2. As regards item No. (iii) above, for reasons stated in our orders in IT Appeal Nos. 208 and 209 (Bang.) of 1982 dated 28-5-1984, we agree with Commissioner (Appeals) and dismiss ground raised by assessee. Bank charges do not also qualify for weighted deduction in light of decision of special Bench of Tribunal in J. H. & Co. v. Second ITO 1 SOT 150 (Bom.). 3. This leaves us with claim for weighted deduction on interest paid to banks on packing loan and export bills. interest is paid on loans advanced by banks in connection with export of goods. loans are advanced at subsidised rate of interest. method of obtaining packing credits appears to be as follows: "The assessee contracts potential buyers abroad and after entering into agreement for export of Indian goods, he approaches bank for providing facilities under packing credit scheme. bank advances amounts only on basis of contract entered into. advance is made available only after irrevocable letter of credit is opened in favour of assessee by foreign buyer. letter of credit, purchase contract and other documents like Bill of Lading, if any, are furnished to bank. bank calculated invoice price on basis of contracts and after retaining margin, balance is credited to assessee's accounts. assessee has to give undertaking that loan taken on packing credit will be repaid by realisation of sale proceeds. As matter of fact, sale document are entrusted to bank for realisation and it is credited to assessee's account on receipt of sale proceeds. assessee cannot change any part of contract. He cannot change destination or quality or part price. Reserve Bank of India has, from time to time, prescribed rules to be adhered to for availing of export packing credit." assessee's claim was that since this was essentially expenditure incurred in connection with export of goods it was entitled to weighted deduction. It was argued that section 35B (1) (b) (viii) applied. This was, however, rejected by IAC, who made assessment, following his directions under sections 144A and 144B of Act for assessment year 1978-79. Commissioner (Appeals) agreed with his and assessee is in appeal. 4. learned counsel for assessee submitted that Indian exporter could not compete with foreign exporter under normal conditions because of high cost of production of goods here. In order to promote exports, banks were permitted to advanced loans at favourable rates of interest to exporters. Since export could not have taken place but for these soft loans, it was argued that interest paid on these loans was expenditure wholly incurred for purposes of export and was entitled to weighted deduction under section 35B (1) (b) (viii) being expenditure incurred in performance of services outside India in connection with or incidental to execution of contract for supply of goods. Reliance was placed on decision of Tribunal Bombay Bench 'C' in Income-tax Appeal No. 393 (Bom.) of 1980 and Income-tax Appeal No. 672 (Bom.) of 1981 where interest on packing credit had been allowed weighted deduction by Tribunal. learned departmental representative, however, stated that this was not expenditure falling within section 35B (1) (b) (viii). It was of same category as export duty and freight charges on which weighted deduction had already been refused by Tribunal in its order in Income-tax Appeals Nos. 208 and 209 (Bang.) of 1982 as also decision of Karnataka High Court in case of Ullal Narayan Mallya & sons (1975) 1 KLJ 487. 5. We have considered arguments advanced by both sides. Every type o f expenditure incurred in connection with export does not qualify itself for weighted deduction. If that were so, even cost of purchase of goods or manufacture would have been allowed weighted deduction. Secondly, packing credit cannot be considered expenditure incurred for purpose of obtaining credit. credit is already obtained. assessee simply pays interest. No expenditure is incurred by assessee in obtaining loan. Therefore, it would be wrong to consider that interest was expenditure incurred by assessee for obtaining credit at concessional rate. If that were so, there would have been no difference between loans obtained at ordinary rates of interest in market and concessional loans. Interest paid on all loans would have been entitled to weighted deduction because all loans were obtained for export business. We do not see any valid distinction between two types of loans. We have already stated that no expenditure was incurred by assessee in obtaining credit. This is expenditure incurred after credit is obtained. ratio of decision of Karnataka High Court in Ullal Narayan Mallya & Sons' case (supra) would apply to issue before us. Section 35B (1) (b) (viii) would apply not only to such expenditure which are of nature of after sales service. Interest would, therefore, fall out of pale of section 35B (1) (b) (viii) for same reasons as freight and export duty. 6. In result, assessee's appeals are dismissed. *** M.S.P. EXPORTS (P) LTD. v. INCOME TAX OFFICER