| Citation(s) |
|---|
| 2001 SLG 267 2001 SLD 267 2001 PTD 1496 (2000) 245 ITR 116 (2002) 85 TAX 72 |
Supreme Court of India
Civil Appeals Nos. 2717 with 4545 to 4547 of 1996, decision dated: 20-07-2000(Civil Appeal No. 2717 of 1996 was by certificate from the judgment and order, dated March 11, 1991 of the Karnataka High Court in I.T.R.C. No. 182 of 1985)
S. P. BHARUCHA AND MRS. RUMA PAL, JJ
D.A. Dave, Senior Advocate (Ms. Pratibha M. Singh, Ms. Kavita Wadia, Ramesh Singh, Maninder Singh and M.S. Syal, Advocates with him) for Appellant. M.L. Verma, Senior Advocate (G. Venkatesh Rao and Ms.,Sushma Suri, Advocates with him) for
Respondent.
Civil Appeals Nos. 2717 with 4545 to 4547 of 1996, decision dated: 20-07-2000(Civil Appeal No. 2717 of 1996 was by certificate from the judgment and order, dated March 11, 1991 of the Karnataka High Court in I.T.R.C. No. 182 of 1985)
S. P. BHARUCHA AND MRS. RUMA PAL, JJ
D.A. Dave, Senior Advocate (Ms. Pratibha M. Singh, Ms. Kavita Wadia, Ramesh Singh, Maninder Singh and M.S. Syal, Advocates with him) for Appellant. M.L. Verma, Senior Advocate (G. Venkatesh Rao and Ms.,Sushma Suri, Advocates with him) for
Respondent.
ESKAYEF (now known as SmithKline Beecham Pharmaceuticals (India) Ltd.)
VS
COMMISSIONER OF INCOME TAX
Law: Income Tax Act, 1961
Section: 37,37(3A)
(a) Income-tax---Business expenditure---Company---Surtax---Not deductible-Indian income Tax Act, 1961, S.37. Held, (i) that the liability to pay surtax is not an admissible deduction in computing the total income. Smith Kline and French (India) Ltd. v. CIT (1996) 219 ITR 581 (SC) fol. (b) Income-tax--Business expenditure---Disallowance of expenditure---Expenditure on advertisement and sales promotion---Expenditure incurred by pharmaceutical company on distribution of free samples of prescription drugs to doctors--Expenditure in nature of publicity and sales promotion---Subsection (3A) of S.37 is applicable to such expenditure---Indian Income Tax Act, 1961, S.37(3A). Having regard to the fact that these were prescription drugs, the target for any advertisement or publicity or sales promotion thereof could only be the doctor who would prescribe them. The object of distribution of the samples of the drugs to the doctors was to make them aware that such drugs were available in the market in relation to the cure of a particular affliction and, therefore, to persuade them to prescribe the same in appropriate cases. So' doing was tantamount to publicity and sales promotion. It fell within the scope of section 37(3A) of the Income Tax Act, 1961, and would be subject to the limitations as to allowability therein contained. Smith Kline and French (India) Ltd. v. CIT (1992) 193 ITR 582 affirmed. CIT v. Ampro Food Products (1995) 215 ITR 904 (AP) and CIT v. J & J Dechane Laboratories (P.) Ltd. (1996) 222 ITR 11 (AP) ref. THIS JUDGMENT DELIVERED BY Civil Appeal No. 2717 of 1996: S.P. BHARUCHA, J.---The appeal relates to the assessment year 1980-81. It is on a certificate of fitness to appeal granted by the High Curt. The certification was only in respect of one question, which reads thus: "Whether on the facts and in the circumstances of the case, the liability to pay surtax is an admissible deduction in computing the total income?" The answer to this question is covered against the assessee by the decision of this Court in the assessee's own case (Smith Kline and French (India) Ltd. v. CIT (1996) 219 ITR 581). The question is, accordingly answered in the negative and…
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