Ajit K.Sengupta, J. - (1.) In this reference under Section 256(2) of the Income-tax Act, 1961, for the assessment years 1978-79 and 1980-81, the following question of law has been referred to this court : "Whether, on the facts and in the circumstances of the case, and having regard to the fact that the brokerage expenses on export sales amounting to Rs. 2,61,827 in the assessment year 1978-79 and Rs. 3,65,768 in the assessment year 1980-81 were paid in rupees to parties in India, the Appellate Tribunal was correct in law in holding that the assessee was entitled to weighted deduction under Section 35B of the Income-tax Act, 1961, in respect of the said payment of brokerage"
(2.) The facts leading to this reference are that the assessee, a limited company, derives income from the manufacture and sale of jute and jute articles, chemicals and from export. The assessee claimed relief under Section 35B of the Act on the brokerage paid on export sales at Rs. 2,61,027 and Rs. 3,85,763 for the assessment years 1978-79 and 1980-81, respectively. The Income-tax Officer allowed relief under Section 35B on 50 per cent. of the said amounts and while allowing the relief he took into consideration the Special Bench decision in the case of J. Hemchand and Co. (1 SOT 150).
(3.) When the matter came up in appeal, the Commissioner of Income-tax (Appeals), after considering the facts and circumstances of the case, directed the Income-tax Officer to examine the question of allowability in the light of the decision in CIT v. Southern Sea Foods (P.) Ltd.;