Court upholds deduction for commission paid to non-resident agents. Legitimate agency arrangement with foreign exchange benefits.

The court dismissed the Revenue's appeal regarding the disallowance of commission paid to non-resident sole selling agents by the assessee. The Tribunal's decision to allow the deduction for the assessment year was upheld, emphasizing that the factual findings did not raise any substantial question of law under section 260A of the Income-tax Act. The court highlighted the legitimacy of the agency arrangement with Central Government approval and remittance through RBI, concluding that the utilization of the agent's services for market promotion was supported by the rise in foreign exchange during the relevant assessment year.

---

---

Issues:
1. Disallowance of commission paid to non-resident sole selling agents.
2. Reliance on Delhi High Court's decision in Modi Industries Ltd. v. CIT [1993] 200 ITR 329.
3. Central Government approval for the agency.
4. Disallowance of commission by the Assessing Officer.
5. Appeal before the Commissioner of Income-tax (Appeals).
6. Appeal before the Tribunal.
7. Substantial question of law raised by the Revenue.
8. Factual findings by the appellate authority and Tribunal.
9. Scope of section 260A of the Income-tax Act, 1961.

Analysis:

1. The case involved a dispute regarding the disallowance of commission paid to non-resident sole selling agents by the assessee. The Assessing Officer disallowed the claim due to lack of infrastructure and services rendered by the agents in the earlier year.

2. The assessee contended before the Commissioner of Income-tax (Appeals) that the reliance on the Delhi High Court's decision in Modi Industries Ltd. v. CIT [1993] 200 ITR 329 was incorrect, and the said decision supported the assessee's case.

3. The assessee's representative also argued that the Central Government approval was obtained for the agency, supporting the legitimacy of the arrangement.

4. The Revenue appealed before the Tribunal against the order of the Commissioner of Income-tax (Appeals). The Tribunal accepted the existence of the agency agreement and the remittance made with RBI permission, leading to allowing the deduction for the assessment year.

5. The Revenue further appealed, raising a substantial question of law regarding the disallowance of commission paid to non-resident sole selling agents, questioning the services rendered by them.

6. The Tribunal's decision was challenged by the Revenue, arguing that the disallowance should not have been deleted as the agents did not provide additional export promotion services beyond what the assessee achieved.

7. The court emphasized that the factual findings by the appellate authority and Tribunal did not raise any substantial question of law under section 260A of the Income-tax Act, dismissing the appeal.

8. It was noted that the appointment of the sole selling agent was approved by the Government of India, and all remittances were made through RBI, with no relation to the directors of the assessee-company.

9. The judgment highlighted that the availability of infrastructure facilities for a commission agent is not mandatory in all cases, and the rise in foreign exchange during the relevant assessment year supported the utilization of the agent's services for market promotion.

10. The court concluded that there was no substantial question of law involved in the appeal, as it primarily dealt with factual findings, citing the decision in CIT v. K. Manickam [2002] 258 ITR 175 to support this view.

---