1991 (8) TMI 48

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....ssment year 1981-82, the assessee, a processor and dealer of cashew kernels, claimed before the Income-tax Officer weighted deduction in respect of commission payments made to five foreign agents amounting to Rs. 2,02,712 under section 35B(1)(b)(iv) of the Income-tax Act, 1961. Under the above provision, deduction can be claimed if the expenditure is incurred wholly and exclusively on maintenance, outside India, of a branch office or agency for the promotion of sale, outside India, of such goods, services or facilities. The Income-tax Officer rejected the claim of the assessee holding that the assessee did not maintain a branch office or agency of its own outside India, but the sales were made through agents who were carrying on the busines....

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....e words "branch" and " office" (these words, in the context, can only mean the branch or office of the assessee manned by his servants) used in the section and, therefore, it should be given the same meaning and, if that be so, the relationship between the assessee and the so called agent shall be that of master and servant. Here, the persons who are doing the agency work are doing agency business for others also. They, therefore, cannot be said to be servants of the assessee and hence the commission paid to them cannot be said to be an expenditure incurred wholly and exclusively for maintaining an agency outside. In support of this contention, the Revenue relied on a decision of this court in CIT v. M. K. Gabrial Babu [1991] 188 ITR 464. R....