Law:

Section:

Section 37(3A) of the Income-tax Act, 1961 - Sales promotion expenses - Assessment year 1985-86 - Whether individual sales made in normal course of business in commercial terms either directly to customer or through its wholesale and other dealers to whom under terms of trade discounts and commissions are allowed, cannot be regarded as sales promotion - Held, yes - Whether, therefore, commission and discounts on such sales should not be taken into account while considering disallowance under section 37(3A) - Held, yes HELD The term 'sales promotion' is not to be confused with the sales actually effected. While sales promotion are measures taken by an assessee to promote generally the sales of the products manufactured by it or dealt with by it, individual sales made in the normal course of business in commercial terms either directly to the customer or through its wholesale and other dealers to whom under the terms of the trade discounts and commissions are allowed, cannot be regarded as sales promotion. [Para 3] CASE REFERRED TO CIT v. India Pistons Ltd. [2001] 250 ITR 279/119 Taxman 348 (Mad.) [Para 4]. T. Ravikumar for the Applicant. P.P.S. Janardhana Raja for the Respondent. JUDGMENT R. Jayasimha Babu, J. - The question referred at the instance of the Revenue is,- "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in its conclusion that commission and discounts on sales amounting to Rs. 9,15,115 should not be taken into account while considering the disallowance under section 37(3A) of the Income-tax Act, 1961 ?" The assessment year is 1985-86. 2. The assessee-company is a public limited company engaged in the manufacture of soda ash and ammonium chloride. It had incurred an expenditure of Rs. 9,15,115 in the relevant previous year…

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