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Judgment
OM PRAKASH, C. J.
This reference is made at the instance of the Revenue, by the Tribunal under s. 256(2) of the IT Act, 1961 (for short ''the Act''), relating to the asst. yr. 1983-84. The question referred to this Court is as follows :
''Whether, on the facts and in the circumstances of the case, the assessee, is entitled to weighted deduction under s. 35B(1)(b)(iv) of the IT Act, 196l?"
The facts of the case, as found by the Tribunal, are that the assessee is engaged in the export of cashew kernels. For the asst. yr. 1983-84, the assessee claimed deduction under s. 35B(1)(b)(iv) of the IT Act, 1961 (for short ''the Act'') on an amount of Rs. 4,88,409 paid to certain foreign agents. The AO denied '' the claim on the ground that the assessee did not maintain any branch or agency outside India within the meaning of s. 35B(1)(b)(iv) of the Act. On appeal, the first appellate authority accepted the contention of the assessee and allowed deduction.
Aggrieved, the Revenue approached the Tribunal in appeal. The Tribunal found as follows :
...... If the assessee incurred expenditure in order to promote sales outside India
it is sufficient to get the benefit of weighted deduction under s. 35B. It was held that the commission paid by the assessee to the agents is the expense incurred by the assessee to maintain an agency outside India. The assessee is, therefore, entitled to claim deduction in respect of the above payment under s. 35B(1)(b)(iv) of the IT Act."
The only submission of learned senior standing counsel before us is that no agency was maintained by the assessee abroad and, therefore, no deduction could be allowed under s. 35B(1)(b)(iv) for maintenance of the agency for the promotion of the sale outside India.
"Agency" is not defined in the Act and, therefore, we take recourse to the dictionary meaning. The word "agency", according to the Concise Oxford Dictionary means: 1unction of an agent or representative., business establishment of an agent". In the case at hand, the assessee had paid commission to a foreign agent, who established his business as that of agent. It is not in dispute that the commission was paid by the assessee to the foreign agent for the promotion of the sale outside India. Such commission paid to the foreign agent, in our view, is squarely a payment for the maintenance outside India of an agency for the promotion of the sale outside India within the meaning of s. 35B(1)(b)(iv) of the Act.
Similar view was taken by this Court in Srivilas Cashew Co. Vs. Commissioner of Income Tax, in which this Court explicitly said that the commission paid by the assessee to the foreign agents is the expenditure incurred by the assessee to maintain an agency outside India for the promotion of sale of the assessee''s goods outside India.
We, therefore, uphold the view taken by the Tribunal. The aforementioned question is, therefore, answered in the negative, that is, in favour of the assessee and against the Revenue.