In Brief
The Supreme Court decided whether payments made by a carpet exporter to a foreign sales representative qualified for weighted tax deduction under Section 35B(1)(b)(iv) of the Income Tax Act, 1961. The assessee had paid Rs. 4,60,433 to Mr. Jack Barouk in Brussels for soliciting carpet orders in Belgium and France on 5% commission. The dispute turned on whether Barouk was the assessee's "agent" under the statute. The Court held that the written agreement between the parties, combined with Reserve Bank of India recognition as an "agency arrangement," conclusively established an agency relationship. All conditions for weighted deduction (one-third additional to actual expenditure) were satisfied, and the appeal was allowed.
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