9911796707
TMI Blog1996 (8) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of Rs. 2,42,670 made to the State Trading Corporation as service charges and the commission of Rs. 1,85,910 paid to local agents of foreign buyers would qualify for weighted deduction under section 35B of the Income-tax Act, 1961?" The question consists of two parts, the first part relates to service charges paid to the State Trading Corporation on which weighted deduction under section 35B of the Act was claimed. The second part relates to service charges and commission paid to local agents of foreign buyers on which weighted deduction was claimed under section 35B of the Act. In so far as the first part of the question is concerned, it related to service charges paid to the State Trading Corporation. When this question came up f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te authority allowed the deduction considering the fact that payment of commission to local agents of foreign buyers would not fall under sub-clause (iii) of section 35B of the Act. On appeal, the Tribunal found that there is no evidence on record to show that there is outright sale in favour of the person, who is having export licence. Further, the Tribunal held that the local agents used to do various services in the matter of exporting the goods by the assessee. The services are enumerated in the order passed by the Tribunal. The Tribunal pointed out that sub-clause (iii) of section 35B of the Act would not be applicable on the facts available on record. The Tribunal recorded the findings that most of the foreign buyers have their agents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the Income-tax Officer, came to the conclusion that there is no evidence on record to show that there was outright sale in favour of the agents. Learned counsel appearing for the assessee submitted that the sale, if at all, is in favour of the local agents of the foreign buyers. As otherwise, it was pointed out that the Tribunal has recorded a finding that there is no evidence to show that there was outright sale in favour of the person, who is having the licence to export. Under such circumstances, it was submitted that the finding of the Tribunal should be accepted, since the Tribunal is the highest fact-finding authority. We have heard learned standing counsel appearing for the Department and learned counsel appearing for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Before the stage of the sale taking place, the foreign buyers and the local agents are performing various services by which the payment made to them would come under sub-clause (i), sub-clause (ii) or under sub-clause (vi) of section 35B of the Act. Since the payment of commission was not classified under sub-clause (iii), the fact whether the commission was paid in India or outside India is immaterial. For this finding, we are depending upon the decision of the Kerala High Court in CIT v. Kerala Nut Food Co. [1991] 192 ITR 585. According to the facts arising in CIT v. Southern Sea Foods (P.) Ltd. [1983] 140 ITR 855 (Mad), the assessee-company had engaged the services of another company "M" for the purpose of procuring orders from foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusion that the commission paid to the local agents of foreign buyers in the present case is eligible for weighted deduction under sub-clauses (i) and (vi) of section 35B of the Act. In Rajan Trading Company v. CIT [1995] 214 ITR 335, this court held that since the commission on export of Rs. 38,459 paid in India is not relatable to export trade, relief under section 35B of the Act was not granted. Therefore, on facts this court came to the conclusion in the abovesaid decision that the commission payment does not relate to export trading. Therefore, this decision would render no assistance to decide the issue arising in the present case. Accordingly, we answer the second part of the question in the affirmative and against the Departme ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
