JUDGMENT

Sen, J.- The following question of law was referred by the Tribunal to the Orissa High Court under Section 256 (1) of the Income Tax Act, 1961 :

"Whether on the facts and in the circumstances of the case, the commission paid by the assessee-firm to Sri Rashiklal P. Rathor (individual) is allowable under Section 40 (b) of the Income Tax Act, 1961 as a deduction while computing the business income of the assessee.

2. The assessee is a partnership firm carrying on a number of businesses including sale and purchase of various commodities as well as mining. The partners of the firm were :

(1) Popatlal Devram

(2) Jayantilal Jagmal

(3) Pragji Devram

(4) Ratilal Odhavji

(5) Rashiklal P Rathor

3. Popatlal is Rashiklal s father. On 1.4.1967, there was an oral partition of the share of Popatlal in the firm amongst Popatlal, his wife and his two sons including Rashiklal. The assets of Rashiklal continued to be invested in the partnership firm. Rashiklal was Karta of a smaller HUF. On 17.10.1978, there was an agreement between Rashiklal and the firm Rashiklal and Company that Rashiklal will receive 37