1996 (2) TMI 51

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..... n 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 ? " The Tribunal has declined by rejecting the appli .....

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..... 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. The Revenue got the same result from the Income-tax Appellate Tribunal. Reading section 37 of the Act it would be seen that it relates to the process of computation of income chargeable under the head " Profits .....

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..... nt 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-section (3B) would be of assistance in the process. The word " sales promotio .....

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