9911796707
TMI Blog2005 (10) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... B)?" The assessment year is 1985-86 and the relevant accounting period is the financial year ended on March 31,1985. The assessee, a registered partnership firm, claimed certain expenses which included local commission as well as export commission. The Assessing Officer invoked the provisions of section 37(3A) read with section 37(3B) of the Act and disallowed a sum of Rs. 1,41,276 vide his order dated March 25, 1998. The assessee carried the matter in appeal before the Commissioner (Appeals) who accepted the claim of the assessee by relying upon the circular issued by the Central Board of Direct Taxes on May 17, 1978. The Revenue carried the matter in appeal before the Tribunal. The Tribunal after referring to the findings recorded by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be allowed as deduction while computing the income chargeable under the head "Profits and gains of business or profession". Thus, the provision requires that any expenditure incurred on advertisement or publicity or sales promotion, which exceeds individually, or in the aggregate the specified limit, twenty per cent, of such excess shall be disallowed. In other words, all the three items of expenditure are allowable under sub-section (1) of section 37 of the Act but because of the use of the term "Notwithstanding anything contained in sub-section (1)" occurring in the opening part of sub-section (3A) of section 37 of the Act the specified percentage is disallowed. Section 37(3B) of the Act specifies expenditure vide clauses (i), (ii) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... element of advertisement and publicity. In the case of CIT v. Gogte Textiles Ltd. [2003] 260 ITR 229 the Karnataka High Court has followed the decisions rendered by the Calcutta and Kerala High Courts as well as its own decision to lay down that the concept of advertisement, publicity and sales promotion would be by way of providing certain incentive or taking certain other steps by which the product could be popularised to promote sales, however, would not take within its sweep commission paid on sales. In the case of CIT v. Print System Products [2000] 243 ITR 8, the Madras High Court has stated that the difference between sales and sales promotion is self-evident. Sales promotion expenses are expenses which are not directly related to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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