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TMI Blog1997 (8) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the expenditure incurred by the assessee-company, which is engaged in the manufacturing of drugs medicines, on literature and related matters constitutes advertisement expenditure. 2. The assessee is a Private Limited Company and is engaged in the manufacture of drugs medicines. During the course of assessment proceedings, the Assessing Officer noted that the assessee had incurred an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks related to photography, modelling charges and for printing of literature. Relying upon the decision of the Hon'ble Karnataka High Court in the case of Smith Kline French (India) Ltd. v. CIT [1992] 193 ITR 582 he held that these expenses were incurred towards advertisement/publicity and sales promotion and consequently, the restrictive clause of section 37(3A) was held applicable. He, accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supported the order of the Assessing Officer. He submitted that the literature was distributed free of cost and there was no other motive but to promote the sales of the products of the company. He submitted that the case of the assessee was squarely covered by the ratio of the Karnataka High Court in the case of Smith Kline French (India) Ltd. 4.1 Shri S.N. Soparkar, the learned counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment of the Hon'ble Andhra Pradesh High Court in the case of CIT v. J J Dechane Laboratories (P.) Ltd. [1996] 222 ITR 11. 5. We have considered the rival submissions and perused the facts on record. One of the essential characteristics of advertisement or for that matter sales promotion will be to make available information about the product to maximum number of persons or public at large. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ributed to doctors was outside the scope of section 37(3A) of the Act. 5.1 As regards the Revenue's reliance on the judgment of the Hon'ble Karnataka High Court in the case of Smith Kline French (India) Ltd., the same is not applicable to the case of the assessee as, in our view, the facts in that case were distinguishable from the facts of the case before us. In that case, the expenditure was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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