Per Shri Prakash Narain, Accountant Member - The only contention that was pressed and argued in this case relates to the disallowance of weighted deduction under section 35B of the Income-tax Act, 1961 ('the Act) on a sum of Rs. 3,68,312 paid by the assessee as commission.

2. The assessee is a manufacturer and exporter of hand-knotted carpets. With a view to maintain and increase its exports in Europe, it had entered into an agency agreement with Ingeborg Unadcath of Hamburg. It will be necessary to quote the relevant provisions of this agreement as under:

"It has been agreed between both the parties as follows:

1. The first party 'KC' are the manufacturers of Indian hand-knotted car- pets who have agreed to appoint the second party as 'AGENTS', Export Promotion Sole Selling Agents in whole of Europe including the United Kingdom for a period of five years.

2. The 'AGENTS' will secure orders for export of hand-knotted carpets from first class customers.

3. 'KC' will manufacture and export the orders submitted and confirmed.

4. It has been decided that a commission of 5 per cent will be paid to 'AGENTS' at the same time when the documents are paid by the customers. 'KC' will give irre