Commission to sales agents is not sales promotion expense; investment allowance issue was referred for opinion.

Commission paid to agents for canvassing orders and procuring sales after sales were effected was treated as remuneration for work done, not as advertisement, publicity or sales promotion expenditure within section 37(3B), so it did not attract the restriction under section 37(3A). On that issue, no referable question of law arose. On the separate investment allowance issue under section 32A, the Revenue's request for a reference under section 256(2) was accepted and the Tribunal was directed to state a case. The Revenue's application therefore succeeded only in part.

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Issues: (i) whether commission paid to representatives for procuring orders after sales were effected constituted sales promotion expenses liable to the restriction under section 37(3A) of the Income-tax Act, 1961; (ii) whether a reference was to be directed under section 256(2) of the Income-tax Act, 1961 on the question relating to investment allowance under section 32A of the Income-tax Act, 1961.

Issue (i): whether commission paid to representatives for procuring orders after sales were effected constituted sales promotion expenses liable to the restriction under section 37(3A) of the Income-tax Act, 1961.

Analysis: The payments were made as commission to agents who canvassed orders and procured sales, and were payable only upon effecting sales. The activity was remuneration for work done and not an advertisement, publicity, or sales promotion activity within the meaning of section 37(3B).

Conclusion: The commission was not sales promotion expense and no question of law arose for reference on that issue.

Issue (ii): whether a reference was to be directed under section 256(2) of the Income-tax Act, 1961 on the question relating to investment allowance under section 32A of the Income-tax Act, 1961.

Analysis: The Revenue's request for a reference on the investment allowance question was accepted and the Tribunal was directed to state a case on that question for the opinion of the Court.

Conclusion: The reference on the investment allowance question was directed.

Final Conclusion: The request for reference failed on the sales commission question but succeeded on the investment allowance question, resulting in a partial allowance of the Revenue's application.

Ratio Decidendi: Commission paid to agents for procuring orders after sales are effected is remuneration for work done and does not amount to sales promotion expenses merely because it may indirectly enhance business.

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