COMMISSIONER OF INCOME-TAX Vs. LAKHANPAL NATIONAL LTD.

JUDGEMENT

(1.) AT the instance of the Revenue, the Income -tax Appellate Tribunal, Ahmedabad Bench 'C' Ahmedabad has made this reference for the opinion of the High Court on the following question:

(2.) THE short facts are that, for the assessment year 1980 -81, the assessee claimed deduction for amount of Rs. 97,662, submitting, inter alia, that this money was used for reimbursing part of the incentive paid to the sales representatives of distributors as agreed between the assessee and its distributors. However, the submission did not find favour with the Assessing Officer and on an appeal being dismissed, the assessee took up the matter to the Tribunal. The Tribunal placing its strong reliance upon the judgment of the Calcutta High Court in the cases of CIT v. The Statesman Ltd. reported in : [1992]198ITR582(Cal) and CIT v. Bata India Ltd. reported in : [1993]201ITR884(Cal) , held that the said reimbursement in accordance with the agreement could not be termed to be an amount spent for sales promotion. With this finding, the Tribunal allowed the appeal.

(3.) THE Division Bench of this Court, in the matter of CIT v. Zippers India reported in : [2006]284ITR142(Guj) , placing its reliance upon the judgment in the matter of Bata India Ltd. : [1993]201ITR884(Cal) has observed that there is a marked distinction between the terms 'sales' and 'sales promotion'. In the said matter, the court observed that the commission paid for local sales as well as for export sales could not be considered to be sales promotion expenditure for the purposes of disallowance considering the fact that the commission was paid for the services rendered.