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TMI Blog2002 (7) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal under section 256(1) of the Income-tax Act, 1961 (in short the "Act"). The question of law involved herein is- "1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the commission paid to the agents on actual sales cannot form sales promotion expenses? 2..." The assessee is a limited company. While framing the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of CIT v. Sutlej Cotton Mills Ltd. [1992] 194 ITR 66, the Tribunal held that the commission paid on actual sales cannot form sales promotion expenses. The above question of law has arisen in the context of section 37(3A) of the Act which reads as under: "37. General.-... (3A) Notwithstanding anything contained in sub-section (1), where the expenditure or, as the case may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 884 and CIT v. Popular Automobiles Limited [1995] 212 ITR 611 has held that: "Sales promotion therefore would acquire an identical meaning to advertisement and publicity that is by providing certain incentives or taking certain other steps by which the product of the manufacturer could be popularised to promote the sale. That would not mean such amounts as are paid to a commission agent who e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid to the commission agent'. In view of the above we are of the view that the Tribunal is right in law in holding that commission paid on sales is not sales promotion expenditure, and therefore the provisions of section 37(3A) have no application." In the above view of the matter, we hold that the commission paid to the agents cannot be treated as sales promotion expenses within the meaning of s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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