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<h1>High Court directs Tribunal to re-examine commission payment for deduction under Income-tax Act</h1> The High Court declined to answer the question posed by the Tribunal regarding the deduction of commission paid by the assessee under section 35B of the ... Export Market Development Allowance, Weighted Deduction Issues:Interpretation of section 35B of the Income-tax Act regarding deduction of commission paid by the assessee for obtaining information about markets outside India for its products.Analysis:The case involved a dispute regarding the deduction claimed by the assessee for commission payment under section 35B of the Income-tax Act for the assessment year 1977-78. The assessee, an exporter of cashew, claimed a deduction of Rs. 64,774 paid as commission to obtain information about markets in Russia for its products. The Income-tax Officer initially disallowed the deduction, stating that the payment was made in India and did not fall under the relevant clauses of section 35B(1)(b) of the Act.The Commissioner of Income-tax (Appeals) allowed the deduction, accepting the assessee's claim that the commission was paid for obtaining information about markets outside India for its products. The Appellate Tribunal upheld this decision. However, the High Court noted that neither the Commissioner nor the Tribunal had evaluated whether the commission was actually paid for obtaining such information, which is a prerequisite for claiming the deduction under section 35B.The High Court held that without a positive finding on whether the commission was indeed paid for the stated purpose, it could not answer the question referred to it by the Tribunal. The Court directed the Income-tax Appellate Tribunal to re-examine the matter and determine the factual veracity of the assessee's claim regarding the commission payment before deciding on the entitlement to deduction under section 35B of the Income-tax Act.In conclusion, the High Court declined to answer the question posed by the Tribunal due to the lack of a definitive finding on the purpose of the commission payment. The case was remanded back to the Tribunal for further evaluation and determination of the factual basis for the claimed deduction under section 35B of the Income-tax Act.
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