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Section 35B [omitted with effect from 1-4-1989] of the Income-tax Act, 1961 - Export markets development allowance - Assessment year 1981-82 - Whether commission paid to foreign agents for export promotion is eligible for weighted deduction under sub-clause (iv) of section 35B(1)(b) - Held, yes FACTS The IAC allowed weighted deduction under section 35B in respect of payment of commission to overseas agents for export promotion. However, the Commissioner, invoking section 263, held that weighted deduction on the aforesaid expenditure was wrongly allowed and the same should be withdrawn. On appeal by the assessee, the Tribunal, on a consideration of the facts and circumstances of the case, held that the expenditure incurred by the assessee-company. In the instant case fell under clause (iv) of section 35B(1)(b) and, accordingly, it was allowable. On reference: HELD Section 35B(1)(b)(iv) provides that export markets development allowance should be allowable if such expenditure is incurred wholly or exclusively on maintenance outside India of a branch office or agency for the promotion of the sale outside India of such goods and services or facilities. The Tribunal found in this case that the expenditure was incurred by the assessee-company on maintenance of the agency outside India for promotion of sale outside India of goods which the assessee dealt in. It would appear from the details of the expenditure submitted before the Tribunal that the payments were made to three foreign agents at U.A.E., England and Australia. Thus, the expenditure, having been made by way of commission to agents in foreign countries for promotion of the business, would fall within the purview of sub-clause (iv) of section 35B(1)(b). CASE REVIEW CIT v. Pooppally foods[1986] 161 ITR 729 (Ker.)followed and relied upon. CIT v. Southern Sea Foods Pvt. Ltd.[1983] 140 ITR 855 (Mad.)distinguished. CASES REFERRED TO CIT v. Southern Sea Foods (P.) Ltd. [1983] 140 ITR 855 (Mad.) and CIT v. Pooppally Foods [1986] 161 ITR 729 (Ker.). Bagchi for the Appellant. JUDGMENT Sengupta, J.-This reference under section 256(1) of the Income-tax Act, 1961 ('the Act') relates to the assessment year 1981-82. 2.…

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