SRIVILAS CASHEW CO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee, the following question of law is referred for our opinion by the Income-tax Appellate Tribunal, Cochin Bench :

(2.) FOR the assessment 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 business of agency independently and for their own benefit and that the payment of commission made to such agents cannot be construed as an expenditure incurred by the assessee for maintaining an agency as contemplated under Clause (iv).

(3.) WE are not impressed by this argument. The word "agency" used in the section has acquired a clear and definite meaning both under law and in trade. The same meaning shall be attributed to the word in the section and not the meaning suggested by counsel for the Revenue. It is all the more so because the Legislature has deliberately used the disjunctive expression "or" denoting that the meaning of the words " branch ", "office" or " agency " cannot be the same. In the decision of the Supreme Court in Lakshminarayan Ram Gopal, AIR 1954 SC 364, the relationship of master and servant and principal and agent were considered in detail and the Supreme Court quoted with approval the statements of law contained in Halsbury's Laws of England :