9911796707
TMI Blog2000 (1) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... sales promotion' within the meaning of section 37(3A) and (3B) of the Income-tax Act, 1961 ?" The assessee is a manufacturer of medicines. The relevant assessment year is 1985-86. During the course of assessment, the Assessing Officer, inter alia, found the assessee claimed Rs. 2,45,780 as expenses on medical literature and journals and also distributed free samples of medicines to doctors and physicians to the tune of Rs. 10,88,920. The Assessing Officer has treated these expenses for advertisement and sales promotion and disallowed 20 per cent. of the expenditure under sub-sections (3A) and (3B) of section 37 of the Act. In appeal the Commissioner of Income-tax (Appeals) has allowed the total expenditure on samples but he sustained the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and sales promotion. Sub-sections (3A) and (3B) of section 37 were initially introduced by the Finance Act, 1978, with an object to place a curb on extravagant and socially wasteful expenditure that was omitted after two years and again these provisions were introduced by the Finance Act, 1983. While these provisions were introduced in 1983, the Hon'ble Finance Minister in his speech addressed in the House reads as under : "Hon'ble Members must be aware of lavish and wasteful expenditure by trade and industry, particularly on travelling, advertisement and the like. With a view to inculcating a climate of austerity and providing a disincentive to unproductive, avoidable and ostentatious spending by trade and industry, I propose to prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure and journals which were distributed to the members of the medical profession cannot be hit by the provisions of sub-sections (3A) and (3B) of section 37 of the Income-tax Act, 1961. In view of the aforesaid facts, we are of the view that the provisions of sub-sections (3A) and (3B) of section 37 cannot be invoked for disallowance under that provision on medical literature and journals distributed by the company, to the medical professionals. In the light of the above discussions, we answer the question in the negative, that is, in favour of the assessee and against the Revenue. The application is, accordingly, disposed of. All parties are to act on a xeroxed signed copy of this dictated order on the usual undertaking. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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