Law:

Section:

Section 37(3A) of the Income-tax Act, 1961 - Sales promotion expenses - Assessment year 1984-85 - Whether commission paid on sales is not sales promotion expenditure and, therefore, provisions of section 37(3A) have no application - Held, yes CASES REFERRED TO CIT v. Sutlej Cotton Mills Ltd. [1992] 194 ITR 66 / 63 Taxman 207 (Cal.) [Para 3] and CIT v. Srinivasa Textile Processing Ltd. [ITRC No. 110 of 1994, dated 15-1-1997] [Para 4]. M.V. Seshachala for the Applicant. ORDER 1. The Tribunal has referred the following question of law arising out of its order dated 16-4-1992, pertaining to the assessment year 1984-85 : "Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that commission paid on sales is not sales promotion expenditure and therefore, provisions of section 37(3A) have no application ?" 2. In the assessment the ITO had disallowed Rs. 3,47,665. That was the amount the assessee had paid towards commission on sales. This had been treated as sales promotion expenses by the ITO. The assessee had challenged this finding in appeal filed before the Commissioner (Appeals). The Commissioner (Appeals) held that the provisions of section 37(3A) had no application to commission paid on sales. He gave relief to the assessee in this regard. The Revenue had raised a ground in the appeal filed to the Tribunal. 3. The…

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