2005 (3) TMI 96

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..... (1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for the opinion to this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that the expenditure of Rs. 1,41,468 in the Delhi set and Rs. 2,80,934 in the Moradabad set which was incurred on prize coupons was not covered by the provisions of section 37(3A) of the In .....

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..... by invoking the provisions of section 37(3A) of the Act. Feeling aggrieved, the respondent preferred an appeal before the Commissioner of Income-tax (Appeals) who had upheld the disallowance. However, in further appeal, the Tribunal had accepted the claim of the respondent and had held that the expenditure incurred by the respondent did not come under any of the clauses mentioned in sub-section ( .....

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..... expenditure on allowance of a trade discount is not expenditure covered by section 37(3A) read with section 37(3B). In the case before us in some of the bundles of biri, which are sold at 75 paise each, the assessee puts a prize coupon of 25 paise or 50 paise. The result is that if a customer gets a bundle from which 25 paise is recovered he would get that amount from the dealer in cash or he may .....

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..... learned standing counsel for the Revenue. Nobody has appeared on behalf of the respondent-assessee. Learned standing counsel submitted that the prize scheme by inserting coupons of 25 paise or 50 paise in some bundles of biri was clearly meant to attract customers and was, thus, a sales promotion scheme. The expenditure incurred was fully covered under clause (i) of sub-section (3B) of section 3 .....

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..... laimed in computing the income chargeable under the head "Profits and gains of business or profession". Sub-section (3B) of section 37 of the Act refers to the expenditure incurred on advertising, publicity and sales promotion. As the expenditure in question clearly falls under the heading sales promotion, the Tribunal was not justified in deleting the disallowance. We accordingly answer the que .....

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