COMMISSIONER OF INCOME TAX Vs. SWADESHI KARYALAY

JUDGEMENT

(1.) The assessee-firm, Swadeshi Karyalay, sale/export of hosiery goods. Weighted deduction under s. 35b of the IT Act, 1961, was claimed by the assessee before the ITO during the assessment proceedings for the asst. yr. 1978-79 in respect of the amount of commission paid by the assessee to the State Trading Corporation. The AO declined to allow the deduction. The CIT (A), however, allowed the weighted deduction under s. 35b of the Act on the sum equivalent to 50 per cent of the amount of commission. The Tribunal, in further appeal, allowed such deduction on the whole amount of the commission.

(2.) An application was filed by the Revenue before the Tribunal under s. 256 (1) of the Act for referring a question of law of this Court, but that was rejected. Now, the present application filed by the Revenue under s. 256 (2) seeks a reference of the following question of law :

(3.) A similar matter has already been examined by the Supreme Court in CIT vs. Stepwell Industries Ltd. (1997) 228 ITR 171 (SC), and it has been held that weighted deduction under s. 35b was not admissible in respect of commission paid to the State Trading Corporation. While dealing with C. A. No. 8790 of 1995 and C. A. No. 9835 of 1995, the Supreme Court found it appropriate to direct the Tribunal to examine the matter afresh so as to see if the assessee's claim falls under any of the sub-clauses of cl. (b) of s. 35b (1) of the Act.