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TMI Blog1996 (2) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... V.V. Kamat, J. 1. Under Section 256(2), the Revenue seeks reference of the following question : Whether, on the facts and in the circumstances of the case and on an interpretation of Section 37(3A) of the Income Tax Act, 1961, the commission paid on export sales is to be reckoned for purpose of disallowance under Section 37(3A) as forming part of sales promotion expenses ? 2. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aturally it took the view that this amount relating to the payment of commission charges did not form part of the business promotional expenditure and had to be excluded from the purview of the provisions of Section 37(3A) of the Income Tax Act. 5. The Revenue got the same result from the Income Tax Appellate Tribunal. 6. Reading Section 37 of the Act it would be seen that it relates to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd relation with the sales that are effected and not otherwise. The amount of commission are necessarily co-related to the corresponding amount of sales and although the intention is to enhance and improve the business and consequently sales of the assessee, properly understood the same could not be a sales promotion activity. To appreciate this aspect a bare reading of the provisions of Sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on No. 13828 of 1994--CIT v. Veneers and Laminations (India) Ltd. by the judgment dated November 3, 1994, although without reasons, depending on the order in Original Petition No. 2867 of 1993--CIT v. Popular Automobiles Ltd. [1995] 212 ITR 611, this court has already declined reference sought for by the Revenue. For the above reasons, the petition stands dismissed. - - TaxTMI - TMITax - Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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