1989 (12) TMI 93

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....37(3B).These sub-sections were added to section 37 by the Finance Act, 1978 with effect from1-4-1979and were omitted by the Finance Act, 1985 with effect from1-4-1986. However, for the assessment years in question, they were operative. The assessee paid agent's commission amounting to Rs. 2,55,700 for the A.Y. 1984-85 and an amount of Rs. 2,16,000 for the A.Y. 1985-86. The Income-tax Officer made disallowances of Rs. 51,133 and Rs. 43,200 in the assessment years in question by treating the said commission as expenditure on "Sales promotion" as referred to in section 37(3B)(i). 3. In appeal, the learned Commissioner of Income-tax (Appeals) referring to the Board's Circular No. 240 dated 17-5-1978, relied upon on behalf of the assessee, he....

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....n was reward for effecting sales and was given for securing subscribers and for ensuring payments by them. In this connection, he referred to the expression "advertisement, publicity and sales promotion". Reliance was also placed by him on the decision dated 25-6-1985 of Chandigarh Bench of the Tribunal in the case of ITO v. Meera & Co. [1986] 24 TTJ 44 and on the Board's Circular referred to above. Lastly he submitted that for the preceding two assessment years 1982-83 and 1983-84 when the agents' commission amounted to Rs. 4,86,200 and Rs. 3,67,500 respectively @ 2% of the chit value for each subscriber introduced by the agent, no disallowance had been made by the Income-tax Officer. 5. We have considered the rival submissions as also ....