1997 (8) TMI 94 - AT - Income Tax

Summary

Issues:
Whether the expenditure incurred by the assessee-company on literature and related matters constitutes advertisement expenditure.

Analysis:
The appeal by the Revenue questioned whether the expenditure by the assessee on literature for doctors constitutes advertisement expenditure. The AO disallowed the expenditure, citing it as advertisement expenses based on a Karnataka High Court decision. However, the CIT(A) disagreed, stating that the literature was for educational purposes, not publicity. The Departmental Representative argued that the motive was sales promotion, but the assessee's counsel contended that the literature aimed to educate doctors about medicines, relying on an Andhra Pradesh High Court judgment.

The Tribunal analyzed the nature of advertisement and sales promotion, emphasizing that advertisement aims to reach the public at large for public favor or notoriety. The literature provided information about products, clinical pharmacology, and medical references to educate doctors, not for general advertisement. Citing the Andhra Pradesh High Court decision, the Tribunal concluded that such expenses were essential for the business and not covered under advertisement expenses. The Tribunal distinguished the Karnataka High Court decision, noting that it involved physician samples, unlike the present case with educational literature. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision in favor of the assessee.