1985 (9) TMI 58 - HC - Income Tax

Summary

Issues involved:
The judgment involves the issue of whether the assessee is entitled to weighted deduction u/s 35B of the Income-tax Act, 1961 for the assessment year 1972-73, specifically in relation to a payment made to a foreign agent for the promotion of business.

Judgment Details:

The Income-tax Officer initially rejected the claim for weighted deduction, arguing that the payment was made to the buyer, not to an agent, and that it was akin to a trade discount rather than a commission. However, the Appellate Assistant Commissioner disagreed, stating that the payment was indeed to an agent and in the nature of commission. The Appellate Tribunal also upheld this view, prompting the Revenue to seek clarification from the High Court through questions of law.

The High Court analyzed the facts and found no substantial difficulty in resolving the dispute. It emphasized that the key issue was whether the assessee was entitled to the weighted deduction for the payment made. The Revenue did not contest that the payment was made, but rather focused on the nature of the payment and the recipient. The Court noted that once the Appellate Tribunal confirmed the findings based on the disclosed facts, there was no real legal question for the Court to address.

The Revenue argued that the Tribunal should have delved deeper into whether the payment fell within the clauses of section 35B to warrant the deduction. However, the Court held that since the Revenue did not raise any other objections beyond the nature and recipient of the payment, there was no need for further inquiry by the Tribunal.

In comparing the present case to a previous decision, the Court highlighted that the facts were straightforward, with the assessee clearly stating that the deduction was for commission paid to a foreign agent for business promotion. The Court concluded that such expenditure would fall within the relevant clauses of section 35B, especially since the Revenue had not previously disputed this claim.

Ultimately, the Court answered the questions in favor of the assessee, affirming their entitlement to the weighted deduction. The judgment would be forwarded to the Income-tax Appellate Tribunal for further action.