Commission and sales incentives outside sales promotion disallowance; factual questions did not justify a tax reference.

Expenses such as commission paid to a selling agent, sales incentive and cash discount were examined for disallowance under section 37(3A) of the Income-tax Act. The Court applied the earlier principle that brokerage and commission on sale of goods do not fall within "advertisement, publicity and sales promotion" for that provision. It also treated the proposed questions as essentially factual rather than referable questions of law. On that basis, the reference application under section 256(2) was held not entertainable and was rejected.

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Issues: Whether the reference application under section 256(2) of the Income-tax Act, 1961 was maintainable on the questions raised regarding disallowance under section 37(3A) of the Income-tax Act, 1961.

Analysis: The expenses in dispute were commission paid to a selling agent, sales incentive and cash discount. The Court treated the matter as governed by the earlier decision holding that brokerage and commission paid on sale of goods do not fall within the phrase "advertisement, publicity and sales promotion" for the purposes of section 37(3A) of the Income-tax Act, 1961. It further held that the questions sought to be referred were essentially factual in character and therefore did not warrant a reference.

Conclusion: The reference application was not entertainable and was rejected.

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