TMI Blog1994 (2) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Income-tax Act on payment of commission of Rs. 89,540 for the assessment year 1975-76 and Rs. 1,25,879 for the assessment year 1976-77 incurred in respect of export sales?" The material facts stated in the statement of the case drawn up by the Tribunal are that the respondent-assessee, a domestic company, is engaged in the business of manufacture and sale of bicycle components, cycle machines, etc., and during the relevant accounting years ended on May 31, 1974, and May 31, 1975, respectively, it carried on export business also. The assessee claimed weighted deduction under section 35B of the Act in respect of commission paid on export sales, amounting to Rs. 89,540 in the assessment year 1975-76 and Rs. 1,25,879 in the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standing counsel for the Revenue, and Mr. Harihar Lal for the assessee. Mr. Pandey has submitted that the expenditure in question is in the nature of an ordinary trade discount and is not in the nature of commission as was the case in J. Hemchand's case (I. T. A. Nos. 3255 and 3330 of 1976-77), and, therefore, the Tribunal was not justified in following that decision. Mr. Harihar Lal, on the other hand, has urged that the facts of the instant case are similar to those in J. Hemchand's case and the Revenue having accepted that decision, no fault could be found with the view expressed by the Tribunal. In support of his stand that the decision of the Special Bench in J. Hemchand's case has been accepted by the Revenue, he has placed reliance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (ii) obtaining information regarding markets outside India for such goods, services or facilities : . . . . . ." The section thus provides that if an assessee, being a domestic company or a person (other than a company) who is resident in India has incurred after February 29, 1968, whether directly or in association with any other person, an expenditure which is not in the nature of capital expenditure or its personal expenses wholly and exclusively on any of the activities referred to in clause (b) of sub-section (1) of section 35B of the Act, it shall be entitled to the benefit of an extra deduction provided therein. In other words, the section provides for weighted deduction for certain classes of specified revenue expenditure in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able under sub-clauses (i) and (ii) of clause (b) of sub-section (1) of section 35B." Thus, the Special Bench of the Tribunal held that the expenditure incurred on commission payments to parties who brought about the export sales by an assessee would be an expenditure of the nature specified in sub-clauses (i) and (ii) of clause (b) of sub-section (1) of section 35B of the Act and, therefore, entitled to weighted deduction under the said section. It is not disputed by learned counsel for the Revenue that the said decision has been accepted by the Department but the untenable argument advanced by him is that the payment to the foreign agents in the present case is not in the nature of commission as was the case in J. Hemchand's case (I. T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commission was paid to the agents abroad, who introduced buyers to the assessee and thereby provided information in regard to export markets and the said finding not being in contest, the expenditure incurred by the assessee on payment of commission to its foreign agents will qualify for weighted deduction under section 35B(1)(b)(ii) of the Act. We do not see any reason or justification to interfere with the view taken by the Tribunal that the ratio of the decision of the Special Bench of the Tribunal in J. Hemchand's case I. T.A. Nos. 3255 and 3330 of 1976-77 is applicable to the facts of the present case. The result, therefore, is that we answer the question referred to us in the affirmative, that is, in favour of the assessee and again ..... X X X X Extracts X X X X X X X X Extracts X X X X
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