COMMISSIONER OF INCOME TAX Vs. SITALAKSHMI MILLS LTD

JUDGEMENT

(1.) THE question referred to us, at the instance of the Revenue, for our consideration is, "whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that expenditure of Rs. 3,12,735 being the sales commission could not be subjected for disallowance under S. 37(3A) of the IT Act, 1961. The assessment year is 1984-85".

(2.) THE assessee is a company. During the asst. yr. 1984-85, a sum of Rs. 3,12,735 being sales commission paid by the assessee was claimed as an expenditure allowable under S. 37(1) of the Act and the same was fully allowed by the AO. The CIT acting under S. 263, directed the AO to allow that expenditure in accordance with S. 37(3A) of the Act. The Tribunal upheld the validity of the CIT's order but held that the provisions of S. 37(3A) are not applicable to the expenditure claimed by the assessee. Hence the present reference at the instance of the Revenue.