AJIT K. SENGUPTA, J.

( 1 ) IN this reference under Section 256 (2) of the Income-tax Act, 1961, for the assessment years 1978-79 and 1980-81, the following question of law has been referred to this court :"whether, on the facts and in the circumstances of the case, and having regard to the fact that the brokerage expenses on export sales amounting to Rs. 2,61,827 in the assessment year 1978-79 and Rs. 3,65,768 in the assessment year 1980-81 were paid in rupees to parties in India, the Appellate Tribunal was correct in law in holding that the assessee was entitled to weighted deduction under Section 35b of the Income-tax Act, 1961, in respect of the said payment of brokerage"

( 2 ) THE facts leading to this reference are that the assessee, a limited company, derives income from the manufacture and sale of jute and jute articles, chemicals and from export. The assessee claimed relief under Section 35b of the Act on the brokerage paid on export sales at Rs. 2,61,027 and Rs. 3,85,763 for the assessment years 1978-79 and 1980-81, respectively. The Income-tax Officer allowed relief under Section 35b on 50 per cent. of the said amounts and while allowing the relief he took into consideration the Special Bench decision in the case of J. Hemchand and Co. (1 SOT 150 ).

( 3 ) WHEN the matter came up in appeal, the Commissioner of Income-tax (Appeals), after considering the facts and circumstances of the case, directed the Income-tax Officer to examine the question of allowability in the light of the decision in CIT v. Southern Sea Foods (P.) Ltd.

( 4 ) THE assessee took the matter to the Tribunal. The assessee contended that the Commissioner of Income-tax (Appeals) was not justified in directing the Income-tax Officer to examine the question of allowability afresh, but he should have upheld the allowance made by the Income-tax Officer. The Departmental representative supported the order of the Commissioner of Income-tax (Appeals ).

( 5 ) THE Tribunal found that the relief was allowed by the Income-tax Officer following the Special Bench decision of the Tribunal in the case of J. Hemchand and Co. (1 SOT 150 ). Consequently, the Tribunal allowed the claim of the assessee.

( 6 ) AT the hearing, Mr. A. C. Moitra, learned counsel appearing for the Revenue, contended that in this case the assessee is not entitled to any deduction as none of the conditions of any of the clauses of Section 35b (1) (b) have been satisfied. According to learned counsel, the commission was paid in India and as such the assessee cannot claim weighted deduction under Section 35b. He has relied on several decisions in support of his contention.

( 7 ) OUR attention has been drawn by Mr. Moitra to the decision of the Madras High Court in CIT v. Southern Sea Foods (P.) Ltd. [1983] 140 ITR 855. In that case, the assessee is a domestic company carrying on business in the export of prawns and shrimps to foreign countries. For procuring orders from foreign buyers, the assessee engaged the services of a company called Messrs. B. C. Mody Export Pvt Ltd. , Bombay. In consideration of this company having secured export orders for the assessee of the aggregate value of Rs. 58,94,800, the assessee paid Rs. 14,737 by way of commission to this company. The question in the relevant assessment was whether the assessee was entitled only to an allowance of the actual expenditure by way of payment of commission in the sum of Rs. 14,737 or whether the assessee was entitled to a weighted allowance as provided in Section 35b of the Act in the sum of Rs. 19,649 (Rs. 14,737 plus one-third thereof ). There the Madras High Court observed as follows (at page 857) :"section 35b of the Act refers to several items of expenditure. With reference to each one of the items of expenditure, there are conditions attached which have to be fulfilled by an assessee before he could successfully claim the weighted allowance granted under the section. According to the Tribunal, the assessee was entitled t

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