Rajes Kumar, J. - (1.) The Income Tax Appellate Tribunal, Allahabad has referred the following question under Section 256 (2) of the Income-tax Act (hereinafter referred to as 'Act') relating to the assessment year 1982-83 for opinion to this Court: "Whether on the facts and circumstances of the case, the Hon'ble Tribunal was justified in reversing the allowance Under Section 35-B in respect of the expenditure incurred on the payment of commission to one Mojavarion of West Germany, who was appointed to look after the interest of the assessee there and procure orders by exhibiting the product of the assessee?"
(2.) The brief facts of the case are that the assessee-applicant (hereinafter referred to as 'assessee') had engaged a foreign commission agent in the name of M/s Mojavarion of West Germany for procuring orders of the carpets manufactured by it. Commission agent was required to be paid the fixed commission on the orders obtained by it. The assessee claimed that to engage a foreign agent amounted to maintenance of a foreign agency and thus the assessee was entitled for an allowance Under Section 35-B on the said expenditure meted out for payment of commission to the alleged foreign commission agent. The said contention was not accepted by the Assessing Officer but was accepted by the first appellate authority. Revenue filed appeal before the Tribunal. The Tribunal reversed the order of the Commissioner of Income Tax (Appeals) and restored the order of the assessing officer on the ground that engaging of foreign agent did not amount to maintaining a foreign agency and thus the expenditure on the engagement of such foreign commission agent did not qualify for allowance under Section 35-B of the Act.
(3.) Heard Sri S.D. Singh learned counsel for the assessee and Sri A.N. Mahajan, learned Standing Counsel for the revenue.;