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Issues:
1. Allowance of weighted deduction on commission payment to UK selling agent under section 35B(1)(b)(iv). 2. Consideration of weighted deduction under other sub-clauses of section 35B(1)(b) if not allowable under sub-clause (iv). Issue 1: Allowance of weighted deduction on commission payment under section 35B(1)(b)(iv): The case involved the assessee, a resident-company deriving income from tea sales, claiming weighted deduction under section 35B for commission paid to a UK selling agent for promoting sales outside India. The Income-tax Officer rejected the claim, upheld by the Commissioner of Income-tax (Appeals). However, the Tribunal allowed the claim under section 35B(1)(b)(iv) of the Act. The learned counsel for the assessee argued that the issue was settled by a Supreme Court decision, stating that mere payment of commission to an agent outside India does not warrant weighted deduction under sub-clause (iv) of section 35B(1)(b). The High Court concurred with this view, holding that weighted deduction on commission to the UK selling agent was not allowable under sub-clause (iv) of section 35B(1)(b). Issue 2: Consideration of weighted deduction under other sub-clauses of section 35B(1)(b): The counsel for the assessee contended that if weighted deduction was not permissible under sub-clause (iv) of section 35B(1)(b), the Tribunal should assess whether it could be allowed under other sub-clauses such as (ii) and (viii) of clause (b) of sub-section (1) of section 35B. Referring to the Commissioner of Income-tax (Appeals) judgment, it was revealed that the assessee had claimed weighted deduction under multiple sub-clauses. The High Court acknowledged the possibility of allowing the claim under different sub-clauses if not permissible under sub-clause (iv) of section 35B(1)(b). Citing precedent, the Court directed the matter to be remanded back to the Tribunal for consideration under alternative sub-clauses, as done in similar cases referred to the apex court. In conclusion, the High Court ruled against the assessee, denying weighted deduction under section 35B(1)(b)(iv) for commission paid to the UK selling agent. However, the Court directed a reconsideration of the claim under other sub-clauses of section 35B(1)(b) by remanding the matter back to the Tribunal, emphasizing a decision within six months.
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