TMI Blog1991 (3) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... urred on physicians' samples is in the nature of advertisement expenditure falling within the restrictive provisions of section 37(3A) of the Income-tax Act, 1961 ?" The first question has to be answered in the negative and in favour of the Revenue following the decision of this court in CIT v. International Instruments (P.) Ltd. [1983] 144 ITR 936. The second question requires consideration. The assessee manufactures drugs. Physicians' samples were claimed as expenditure under section 37 of the Income-tax Act, 1961 ("the Act", for short). This expenditure was treated as an expenditure incurred towards advertisement, publicity or sales promotion and, consequently, the restrictive clause of section 37(3A) of the Act was applied resulting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to medical practitioners, there is no inducement to the public to buy those drugs. The drugs are not sold to the medical practitioners at all. These samples may be used by the medical practitioners to treat their patients and if they find the drugs useful and beneficial, they may prescribe them thereafter. The assessee, according to learned counsel, collects information from the medical practitioners about the curative value of the drugs and their usefulness in treatment so that further research could be carried out either to improve the same or to produce fresh and new drugs. The substance of the contention on behalf of the assessee is that the three words referred to above should result in a propaganda for the drugs in question throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the product through newspaper advertisements, posters or some other similar methods. We do not think that such a limited meaning should be given to the three words. The nature of the advertisement or publicity depends upon the nature and quality of the article in question. An inducement to the public to buy a particular commodity may be formulated in a mode most suitable to the article in question. The members of the public would not buy a drug just because it is advertised repeatedly or publicised through posters or announced on the T. V., etc. The members of the public should have confidence about the curative value of the drug and such confidence could be created mainly by the medical practitioners prescribing the said drug or when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn. Subsequently, the assessee sent a letter modifying the original return of income and offered to confine the claim under this head to a part of the expenditure. Learned counsel for the Revenue is justified in pointing out the above circumstance as an additional factor in support of the conclusion arrived at by the Appellate Tribunal. Each of the three words "advertisement, publicity and sales promotion" cannot always be confined to distinct and different concepts. Some aspects of one word would naturally overlap with the meaning attributed to the other word. No doubt, in a commercial sense, the purpose of these activities is to gain goodwill and a market but the mode of achieving this object cannot be confined to the limited meanin ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
