ANAND PRAKASH, A.M. assessee is public undertaking manufacturing power generating equipments. It incurred expenses aggregating to Rs. 15,23,91 6 under head "sales promotion expenses". On scrutiny of aforesaid items, IAC (Assessment) found that expenses included in above aggregate sum comprised, inter alia, gift items, entertainment of customers, expenses incurred in connection with seminars, expenses incurred in respect of accommodation provided for customers, expenses relating to conveyance provided to customers, expenses incurred for printing new year greeting cards etc. Some of these expenses were purely business expenses e.g. expenses incurred in connection with arranging seminars. Other expenses, according to IAC (Assessment) were merely entertainment expenses, though given nomenclature of sales promotion expenses. He, therefore estimated that out of Rs. 15,23,91 6 Rs,5,23,91 6 would be business expenses, and remaining sum of Rs. 10 lacs would be expenditure on entertainment of customers, which was not allowable in terms of sub-s. (2a) of s. 37 of IT Act, 19 6 1. Accordingly he disallowed Rs. 10 Lacs out of aforementioned sum of Rs. 15,23,91 6 . 2 . assessee appealed against aforesaid disallowance to CIT (A) , who, after perusing material on record, held that estimate of IAC (Assessment) was fair and deserve, interference. 3. ld. counsel for assessee assails above finding of ld. CIT (A). According to him, it would meet ends of justice, if half of expenditure is disallowed as being on entertainment and remaining amount be taken as business expenditure. On behalf of Revenue, however it was urged that estimate made by IAC was fair and that, therefore, it should not be interfered with. 4 . We have given careful consideration to facts of case and rival submissions. disallowance in question is based on mere estimate and in absence of bifurcation of details, it is impossible to arrive at any scientific classification of expenditure. It is well settled that when it is mere case of estimate, appellate authorities should be slow to interfere with discretion of lower authorities. following observations of their Lordships of Hon'ble Supreme Court on this point are pertinent and may be noted in Commr. Of ST vs. . H.M. Esufali H.M. Abdulali 1973 CTR (SC) 317 : (1973) 90 ITR 271 (SC) : "If estimate made by assessing authority is bonafide estimate, and is based on rational basis, fact that there is no good proof in support of that estimate is immaterial. Prima facie, assessing authority is best judge of situation. It is his "best judgment" and not of anyone else... In case of "best Judgement" assessments, Courts will have to first see whether accounts maintained by assessee were rightly rejected as unreliable. If they come to conclusion, that they were rightly rejected, next question that arises for consideration is whether basis adopted in estimating turnover has reasonable nexus with estimate made. If basis adopted is held to be relevant basis even though Courts may think that it is not most appropriate basis, estimate made by assessing authority cannot be disturbed........" above observations were made by their Lordships of Hon'ble Supreme Court in context of best judgment assessment under ST Act but guidance provided therein is relevant even for determining correctness or otherwise of bifurcation of various expenses on estimate basis. estimate should not be capricious or arbitrary, it should be bona fide. If it has been made on rational basis, after scrutinising entire material on record, appellate authority should not interfere with order of assessing authority merely because different conclusion could also be arrived at by some other person. ld. CIT(A) has rightly pointed out that analysis of IAC (Assessment), while making estimate of allowable expenses, does not suffer from any flaw and as such it would not be proper to interfere with his discretion in this matter. estimate at 50 per cent would be without any basis. We, therefore, decline to interfere with orders of authorities below on this point. ld. IAC (Assessment) has already taken into account expenses on running of seminars etc. which were business expenses. Most of expenses, however, are not of that type, as is clear from samples given by IAC (Assessment) at p. 23 of this order. No material has been given by IAC (Assessment) at p. 23 of this order. No material has been placed on record before us to show that said analysis does not reflect real pattern of expenses debited under aforesaid head. orders of ld. CIT (A), therefore, stand confirmed on this point. 5. next controversy is with regard to weighted deduction under s. 35B in respect of following: Description of expenditure Name of in respect of which relief is being amount of office claimed. expenditure. . . Rs. 1. Trichy Expenditure incurred on 2,34, 6 office maintenance of site office. 7,378 2. Bhopal (i) Tender Expenses 20,000 (ii) Entertainment expenses of . 1, 6 4,470 foreign customers (iii) Share of expenses for . 37,39,559 export promotion (iv) Export market . 4,0 6 ,937 development expenses . (v) Sales promotion expenses 8,9 6 4 3.Exports (i) Tender expenses 7,48,000 Departments . (ii) Establishment expenses 11,82,000 4. Expenses incurred in 58,972 P.P.E.R. connection with foreign projects Expenses incurred in 5. O.P.D. 94,29,205 connection with foreign projects Claim regarding Trichy Office 6 . While disallowing expenditure at Trichy ld. IAC (Assessment) had made following observations: "TRICHY: total expenditure on which export market development allowance has been claimed is of Rs. 2,39,10,708 and out of this, expenditure of Rs.2,34, 6 7,378 is expenditure at site office at Malaysia and Libya and represent cost of labour etc. For execution of contracts at these places. Such expenditure has been specifically excluded from category of expenditure which is entitled to export market development allowance by Finance (No. 2) Act, 1980. following expenditure in this Unit would be eligible for export market development allowance : Advertisement outside India: 4,194 Foreign travelling: 4,41,135 . 4,43,329" Before observing as above, IAC (Assessment) had pointed out that provisions of s. 35B had gone radical alterations w.e.f. 1st April, 1981 and that now expenses on three heads alone were allowable as below : "(i) advertisement or publicity outside India in respect of goods, services of facilities which tax payers deals in or provides in course of business, (ii) maintenance outside India of branch, office of agency for promotion of sale outside India of such goods, services or facilities, (iii) travelling outside India for promotion of sale outside India of such good, services or facilities including travelling outward from and return to India." site expenses at Libya and Malasiya did not fall in any of above categories and therefore, according to IAC (Assessment) weighted deduction under s. 35B was not permissible in respect of Rs. 2,34, 6 7,378. On appeal, ld. CIT (A) has sustained above finding of ld. IAC (Assessment). 7 . assessee is dissatisfied with above finding of authorities below. It was contention of ld. counsel for assessee that entire expenditure should be regarded as expenditure on publicity covered by sub-cl. (I) of cl.(b) of sub-s. (1) of s. 35B. expenditure was also covered, according to him by sub-cl. (iv) of cl.(b) of s.35B. In any case, pointed out, ld. counsel for assessee , ld. CIT(A) had failed to allow weighted deduction to assessee-company in terms of sub-cl, (ix) of cl.(b) of sub-s.(1) of s. 35B r/w r. 6 AA. 8. On behalf of Revenue, order of Id. CIT (A) is supported. 9 . We have given careful consideration to facts of case and rival submissions. various sub-clauses of cl. (b) of sub-s.(1) of s. 35B in context of which arguments have been put forward by ld. counsel for assessee may be noted before examining same on merits: "The expenditure referred to in cl.(a) is that incurred wholly and exclusively on (i) Advertisement or publicity outside India in respect of goods, services of facilities which assessee deals in or profits in course of its business. (iv) Maintenance outside India of branch, office or agency for promotion of sale outside India 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. (ix) Such other activities for promotion of sale outside India of such goods, services or facilities as may be prescribed". 1 0 . Sub-cl. (i) referred to above refers, to expenditure incurred on advertisement or publicity outside India in respect of goods, services or facilities, which assessee deals in or provides in course of its business. This expenditure cannot include expenditure necessary for existence of company's office outside India on plea that by its sheet existence, company was advertising its presence in foreign country. subject matter of relief is not expenditure incurred on keeping company's existence in of relief is not expenditure incurred on keeping company's existence in foreign country in connection with execution of contracts. expenditure referred to in sub-cl. (i) is clearly very limited one, namely, expenditure incurred by way of advertisement or publicity, regarding not existence of company, but regarding goods, services or facilities which company was capable of providing to customers. expenditure for maintenance of site office in Libya Malasiya cannot, therefore, be covered by sub-cl. (i) it was sought to be made out by ld. counsel for assessee. claim is absolutely without any merit and deserves to be rejected. Accordingly we reject it. Sub-cl. (iv)referred to above refers to expenditure incurred on maintenance outside India of branch office or agency for portion of sale outside India of goods, services or facilities and not for execution of contracts. finding of authorities below is that expenditure incurred in maintaining site office in Malasiya and Libya is for purpose of executing contracts for supply of generators, and other power generating equipments and installation thereof. expenses in respect of which weighted deduction is to be given and which are referred to in sub-cl. (iv) are not of above type. expenditure in order to be eligible for weighted deduction under sub-cl, (iv) referred to above must be limited expenses incurred by assessee for maintaining branch office, which would be working as out fit of assessee in foreign country for purpose of promoting sales of company outside India. Promoting of sales does not mean execution of contracts. execution of contracts is with regard sales already procured. Expenditure referred to in sub-cl. (iv) is for getting more and more orders which would result in sale and not in pursuing orders of sale, which have already been procured. expenses in question do not fall in this category also. Expenses which fall in sub-cl. (vii) have already been allowed to assessee by authorities below. That only leaves sub-cl. (ix) for consideration. rule which prescribed various activities for promotion of sale outside India of goods., services or facilities of company being r. 6 AA was inserted by Income-Tax (Eighth Amendment) Rules, 1981 w.e.f. 1st Aug., 1981. accounting period of assessee, company ended on 31st March, 1981. ld. departmental representative, therefore, submitted that relief in terms of r. 6 AA could not be granted to assessee for asst. yr. 1981-82 , for rule was enacted after previous year had ended. On behalf of assessee however, it was pleaded that rule was in fact part of sub-cl. (ix) of cl.(b) of sub.s.(1) of s. 35-B and once enacted it had to be read as part of sub cl. (ix) and said sub-cl. (ix), was there on statute right from very beginning and, therefore, if concession could be allowed to assessee in terms of sub-cl. (ix), it should be given to it and that benefit of sub-cl. (ix) could not be denied to assessee merely because rule was enacted by IT (Eighth Amendment) Rule, 1981 w.e.f.1st Aug., 1981. 11. In our opinion, there is merit in submission of assessee's ld. counsel. rule has no doubt been inserted by IT (Eighth Amendment) Rules, 1981 w.e.f. 1st Aug., 1981, but as soon as said rule is promulgated, it becomes part of sub-cl. (ix) of cl.(b) of sub-s. (1) of s. 35B of IT Act, 19 6 1, and therefore, assessee's claim for weighted deduction in terms of r. 6 AA deserves to be examined in respect of any assessment order which would be pending on date when said rule was promulgated. In as much as authorities below have not examined claim of assessee in terms of said r. 6 AA matter deserves to be remitted back to IAC (Assessment) for examining assessee's claim under s. 35B in light of aforesaid rule. Whatever relief is admissible to assessee in terms of said rule would be granted to assessee by IAC (Assessment). Claims in respect of other branches 12. claims put forward on behalf of assessee and as listed above with regard to other branches also deserve to be examined in light of r. 6 AA and, therefore claim deserve to be remitted to IAC (Assessment) and we accordingly do so. 1 3 . expenses in respect of which weighted deduction has been claimed for Bhopal Division are contained at annexure 8 to order of IAC (Assessment). It is submission of assessee that tendering expenses and sales promotion expenses would be covered by r. 6 AA. In view of facts that we are restoring matter back to IAC (Assessment) for examining assessee's claim in terms of r. 6 AA, we express no opinion with regard to these two items at this stage. IAC (Assessment) will examine them in light of r. 6 AA as mentioned above. Expenses on foreign travel have also been debited to extent of Rs. 5,14,004. These expenses appear prima facie, to be covered by sub-cl. (vii) of cl.(b) of sub-s. (1) of s. 35B. IAC (Assessment) does not refer to these expenses in his observations regarding Bhopal unit nor does CIT(A) mentioned in his order as to why weighted deduction in respect of these foreign travel expenses should not be allowed to assessee. Apparently, assessee's claim, on this point has not been examined. same, therefore, deserves to be examined. We, accordingly, direct that IAC (Assessment) will reexamine claim of assessee of weighted deduction in respect of it in terms of sub.cl. (vii) referred to above. assessee s claim with regard to entertainment expenditure incurred on foreign customers to extent of Rs. 1, 6 4,470 is pressed before us in terms of sub-cl.(i) of cl.(b) of Sub- s. (1) of s. 35B of IT Act, 19 6 1. We are, however, not impressed by this argument of assessee for entertainment of foreign customers in India cannot, in our opinion, constitute expenditure incurred on advertisement or publicity outside India. claim, therefore, stands rejected. ld. Counsel for assessee had cited authority of J. Hemchand & Co. vs. ITO (1982) 1 SOT 150 (Bom)(SB) before us. We are, however, unable to read case of J. Hemchand and Co. (supra) as laying down proposition that expenditure incurred on foreign customers in Indian should be construed as expenditure incurred on publicity and advertisement outside India. Exports Division 14. assessee had claimed weighted deduction for Rs. 6 8. 6 1 lacs as per annexure 11 to assessment order. entire claim of assessee was rejected by ld. IAC. ld. counsel for assessee submits that weighted deduction is, any case admissible with regard to following items: 1. Travelling expenses for export 3,95,000 2. Export tendering expenses 7,48,000 3. Advertisement, sales promotion and publicity 1,8 6 outside India ,000 ld. IAC (Assessment) does not discuss these items in his order in detail and does not assign any reason for not granting relief in respect of travelling expenses and advertisement outside India. claim of export tendering expenses is stated by assessee to be covered by r. 6 AA. We have already restored matter with regard to applicability of. 6 AA to IAC (Assessment) for examination. question of travelling expenses and advertisement and publicity outside India also, in our opinion deserve to be re- examined and if for some reason, IAC (Assessment) is of opinion that claim of assessee should not be accepted, he should indicate his reasons for rejecting claim of assessee. assessee's ld. counsel had put forward his claim with regard to establishment expenses pertaining to services covered by sub-cls. (i) ,(iv), (vii) and (ix) of cl.(b) of sub-s.(1) of s. 35B. We are however , unable to accept aforesaid claim of assessee. expenditure which would be covered by aforesaid four clauses alone would be allowed weighted deduction. Any collateral expenditure does not, in our opinion qualify for weighted deduction, even though it may have been incurred in relation to running of assessee's business. Per Division : Calcutta 15. total expenditure in respect of which relief under s. 35B has been claimed in respect of above division was Rs. 1,05,958. Out of above expenditure that are incurred by assessee in Pattani, Thailand has been granted weighted deduction by IAC(Assessment) He refused to grant weighted deduction in respect of expenditure of Rs. 58,972 incurred by assessee in India. Out of aforesaid expenditure, Rs. 10, 6 70 is expenditure of T.A. allowed on foreign trips. assessee presses its claim under s. 35B in respect of it other items are not pressed. assessee's case is that this amount, though paid in India is with regard to foreign travel expenses and therefore, it was entitled to weighted deduction under s. 35B (1) (b) (vii). This claim, in our opinion, deserves to be examined in same manner as indicated above. O.P.D. 1 6 . assessee claimed weighted deduction, inter alia, on travelling expenses incurred in India to extent of Rs. 19,40,590. assessees claim for weighted deduction was denied by IAC (Assessment) by observing, inter alia that there was no provision in amended s. 35B (1)(b) for weighted deduction in respect of travelling in India. ld. counsel for assessee submits that IAC (Assessment) misunderstood nature of aforesaid expenses. This was not expenditure incurred for travelling inside India. This was expenditure incurred in India for purchasing tickets for travelling outside India. payments for tickets for travelling outside are made in India in rupees and simply because money had been paid in India in rupees, claim of weighted deduction under s. 35B(1) (b) (vii) cannot be denied to assessee. Prima facie, there is merit in assessee's submission, provided nature of expenditure is what assessee indicates it to be. matter, therefore, deserves to be re-examined and, accordingly, we restore matter back to IAC (Assessment) for going into this nature of this expenditure and re-determining allowability of assessee's claim under s. 35B in respect of aforesaid item. 1 7 . next controversy in present appeal is with regard to disallowance of assessee's claim under s. 80I, 80M and 80J in respect of expansion at Trichy Plant. It is brought to out notice by either sides that aforesaid subject matter has been restored back to file of IAC (Assessment) in earlier years for re-examination. It, is therefore, prayed by either sides that for this year also, matter may be restored to IAC (Assessment) for re-examination in light of order of Tribunal in respect of earlier years. 18. above submissions of both sides is correct. We consider this issue in respect of immediately preceding asst. yr. 1980-81, vide paragraph 13 or our order in ITA No. 5250/D/84 dt. 30th April, 198 6 . In terms of aforesaid observations of Tribunal, with which we respectfully agree, matter is restored to IAC (Assessment). While determining above issue, observation made by Tribunal in paragraph 14 and 15 of its aforementioned order will also be borne in mind by IAC (Assessment). 1 9 . last ground was raised by assessee in immediately preceding assessment year also and was disposed of by Tribunal by Making following observations: " 4th ground of appeal is merely protective. deduction of Rs. 134.59 lacs has already been allowed to assessee by CIT(A) and Tribunal while determining assessees appeal pertaining to asst. yr. 1979-80. claim which has been allowed there cannot be allowed for second time i n respect of present assessment year. learned CIT(A) was therefore, justified in rejecting assessee's claim on this account." above observations apply to assessee's claim this year also, Accordingly, we reject assessee's claim on point. 20. In result appeal stands partly allowed. *** BHARAT HEAVY ELECTRICALS LTD. v. INSPECTING ASSISTANT COMMISSIONER