AJIT K. SENGUPTA, J.

( 1 ) IN this reference under Section 256 (1) of the Income-tax Act, 1961, for the assessment year 1984-85, the following question has been raised before this court :"whether, on the facts and in the circumstances of the case, when according to the finding of the Commissioner in his order, the commission of Rs. 2,50,587 was sales commission simpliciter, the Tribunal was justified in law in holding that relief under Section 35b (1) (b) (iv) of the Income-tax Act, 1961, is allowable on the same and thereby vacating that portion of the order of the Commissioner ?"

( 2 ) SHORTLY stated the facts are that originally the Assessing Officer allowed deduction under Section 35b (1) (b) (iv) of the Act on the commission of Rs. 2,50,587 paid to the foreign agents.

( 3 ) SUBSEQUENTLY, the said assessment was set aside by the Commissioner of Income-tax, West Bengal-1, Calcutta, vide his order under Section 263 of the Act, since it was viewed by him that the commission paid to foreign agents did not qualify for the deduction under Section 35b as no branch office had been maintained by the assessee-company outside India.

( 4 ) ON appeal by the assessee-company against the order of the Commissioner of Income-tax under Section 263, the Tribunal had decided the issue in favour of the assessee-company according to the ratio of the Income-tax Appellate Tribunal, Allahabad Bench, in the case of Kothari Carpets [1984] 9 ITD 357, which had been followed by the Income-tax Appellate Tribunal, Calcutta, in several cases.

( 5 ) BEFORE us the contentions raised before the Tribunal have been reiterated.

( 6 ) WE have heard learned counsel appearing for the parties.

( 7 ) THE agreement dated February 16, 1981, by and between the assessee and the foreign agents, inter alia, provided as follows :"you will procure and refer to us for our acceptance orders for the products in accordance with such instructions and directions as we may from time to time give to you. You will have no right to accept on our behalf orders procured by you or make contracts for the sale of the products on our behalf. You shall have no right to accept on our behalf any payment by any purchaser of the products except in cases where we may authorise you in writing. You will promote the sale of the products in the territory and render us full assistance and co-operation in this regard and maintain constant contacts with the purchasers or potential purchasers thereof. In consideration of your services hereunder, we shall pay you a commission of five per cent. on the f. o. b. value of the products under orders procured by you and accepted and executed by us. This agreement is subject to the approval of the Reserve Bank of India and of other authorities in India if so required. "

( 8 ) THE said agreement was approved by the Reserve Bank of India which would be evident from the registration certificate dated October 3, 1981, for remittance of commission on exports issued by the Reserve Bank of India. It is not in dispute that the assessee paid commission to the foreign agents who acted on behalf of the assessee for promotion of the sale of products outside India.

( 9 ) THE question is whether such deduction will come within the purview of Section 35b (1) (b) (iv) of the Act. The contention of Mr. Moitra is that this would be governed by Section 35b (1) (b) (iii ).

( 10 ) THIS contention, however, cannot be accepted inasmuch as Clause (iii) was deleted with effect from April 1, 1981.

( 11 ) OUR attention has been drawn to the decision in the case of CIT v. Chloride India Ltd. [1992] 193 ITR 355 (Cal ). There this court observed as follows (at page 357) :"the contention raised by the Revenue before the Tribunal was that the expenditure incurred on payment of commission was not allowable and, in this connection, reliance was placed on a decision of the Madras High Court in CIT v. Southern Sea Foods (P.) Ltd. [1983] 140 ITR 855. In that case, the commission was paid

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