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TMI Blog2005 (10) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... rmative, i.e., in favour of the assessee and against the Revenue X X X X Extracts X X X X X X X X Extracts X X X X ..... Thereafter, once again the provisions were inserted by the Finance Act, 1983, with effect from April 1, 1984, and were omitted with effect from April 1, 1986 by the Finance Act, 1985. Therefore, the provisions were operative for the assessment years 1979-80 and 1980-81 and thereafter for the assessment years 1984-85 and 1985-86. Section 37(3A) of the Act provides that where the expenditure or, as the case may be, the aggregate expenditure incurred by an assessee on any one or more of the items specified in sub-section (3B) exceeds the stipulated limit, twenty per cent, of such excess shall not be allowed as deduction while computing the income chargeable under the head "Profits and gains of business or profession". Thus, the provision re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for making sales is a part and parcel of the expenditure for selling the products or the goods in which the assessee trades, while expenditure incurred on sales promotion would be general in nature and relate to creating awareness about the product of the assessee. The decision of the Calcutta High Court in the case of CIT v. Bata India Ltd. [1993] 201 ITR 884 on which the Tribunal has placed reliance lays down that the expression "sales promotion" though of wide amplitude and undefined, is to be understood in its meaning in the setting in which it occurs, viz., it necessarily involves an element of advertisement and publicity. In the case of CIT v. Gogte Textiles Ltd. [2003] 260 ITR 229 the Karnataka High Court has followed the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 37 of the Income-tax Act." Applying the aforesaid principles to the facts concurrently found by the Commissioner (Appeals) and the Tribunal, it is apparent that the commission paid for local sales as well as for export sales cannot be considered to be sales promotion expenditure for the purpose of disallowance considering the fact that the commission was paid for the services rendered. In the circumstances, the Tribunal was right in law in deleting the addition of Rs. 1,41,276 made under section 37(3A) of the Act by treating the commission paid as not falling within the provisions of section 37(3B) of the Act. The question is accordingly answered in the affirmative, i.e., in favour of the assessee and against the Revenue. The refer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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