TMI Blog1985 (6) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... he ITO observed that the commission paid in a sum of Rs. 53,075 was for procuring orders for the supply of engines and other material. On that basis, the ITO came to a conclusion that the commission was paid in order to procure orders which have promoted the sales of the assessee-firm. He, therefore, treated the commission as part of sale promotion expenses. He, therefore, treated the entire amount of commission as sale promotion expenses and dealt with it under the provisions of section 37(3A). 3. When the issue came before the Commissioner (Appeals), he admitted the contention of the assessee that commission was not only paid for procuring orders but also for after sales service. 4. The learned senior departmental representative while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ublicity in the garb of sale promotion. In the instant case, it was not sale promotion at all. He even drew our attention to an extract from the Finance Minister's Budget Speech for 1978-79. 5. After taking into consideration the rival submissions we are unable to interfere in the finding of the Commissioner (Appeals). Provisions of section 37(3A) were introduced for the first time in the Finance Act, 1978, and were applicable for the assessment years 1979-80 and 1980-81. Sub-section (3A) in its amended form is as under : "Notwithstanding anything contained in sub-section (1) but without prejudice to the provisions of sub-section (3), where the aggregate expenditure incurred by an assessee on advertisement, publicity and sales promotion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same, i.e., advertising or making things or persons publicly known. The words 'sale promotion' are, however, not defined anywhere and as such one has to look into the intention of the Legislature when the provision was introduced. The Hon'ble Finance Minister while introducing the Budget, in his speech, remarked: "Extravagant and socially wasteful expenditure is often incurred on advertisement, publicity and sale promotion. In order to put a curb on such expenditure at the cost of exchequer, I propose to provide for the disallowance of a part of such expenditure in the computation of taxable profits...." Then, departmental Circular No. 240 dated 17-5-1978 was issued to explain the above provision, extract from which is : "As the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut incurring that commission. In this case, the commission has been paid to agents for rendering specific services, i.e., for procuring orders for sales, ensuring payment from the customers and for rendering after sale service under the warranty period. The issue has been thoroughly dealt with by the Commissioner (Appeals) in paragraph Nos. 11 to 13 of his order wherein he has held that the commission would not form part of sale promotion while working out the disallowance. Even otherwise, for finding out true meaning of the words 'sale promotion' used in section 37(3A), the principles of ejusdem generis would apply, which means, if a general word is added to specific word (advertisement and publicity), the general word would take its colou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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