9911796707
TMI Blog1989 (12) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... to section 37 by the Finance Act, 1978 with effect from1-4-1979and were omitted by the Finance Act, 1985 with effect from1-4-1986. However, for the assessment years in question, they were operative. The assessee paid agent's commission amounting to Rs. 2,55,700 for the A.Y. 1984-85 and an amount of Rs. 2,16,000 for the A.Y. 1985-86. The Income-tax Officer made disallowances of Rs. 51,133 and Rs. 43,200 in the assessment years in question by treating the said commission as expenditure on "Sales promotion" as referred to in section 37(3B)(i). 3. In appeal, the learned Commissioner of Income-tax (Appeals) referring to the Board's Circular No. 240 dated 17-5-1978, relied upon on behalf of the assessee, held that payments made to the agents f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as given for securing subscribers and for ensuring payments by them. In this connection, he referred to the expression "advertisement, publicity and sales promotion". Reliance was also placed by him on the decision dated 25-6-1985 of Chandigarh Bench of the Tribunal in the case of ITO v. Meera Co. [1986] 24 TTJ 44 and on the Board's Circular referred to above. Lastly he submitted that for the preceding two assessment years 1982-83 and 1983-84 when the agents' commission amounted to Rs. 4,86,200 and Rs. 3,67,500 respectively @ 2% of the chit value for each subscriber introduced by the agent, no disallowance had been made by the Income-tax Officer. 5. We have considered the rival submissions as also the decision referred to above. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, who not only secure the subscribers but also ensure due payments connected therewith. Thus the payment is for rendition of specific services. If there are no sales, there is no commission. Such being the nature of commission, the question of lavishness of expenditure with reference thereto would, therefore, not arise. Taking all these factors into consideration, therefore, it cannot be said that the payment of commission was to form part of sales promotion under sub-sections (3A) and (3B). We, therefore, respectfully agree with the view expressed by Chandigarh Bench in the case of Meera Co. We, therefore, uphold the order of the learned Commissioner of Income-tax (Appeals) in this regard. 6. The appeals, therefore, fail and are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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