TaxTMI 
TaxTMI 
2000 (7) TMI 1
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....tion, which read thus : "Whether, on the facts and in the circumstances of the case, the liability to pay surtax is an admissible deduction in computing the total income ?" The answer to this question is covered against the assessee by the decision of this court in the assessee's own case (Smith Kline and French (India) Ltd. v. CIT [1996] 219 ITR 581). The question is, accordingly, answered in the negative and in favour of the Revenue. The civil appeal is dismissed. No order as to costs. Civil Appeals Nos. 4545-4547 of 1996 : These are appeals from the judgment and order of the Division Bench of the Karnataka High Court in income-tax references. The questions that the High Court was called upon to answer read thus : "Question of law ....
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....octors did not amount to advertisement or publicity or sales promotion and, therefore, all the expenditure incurred by the appellants on such distribution was exempt, under the provisions of section 37 of the Income-tax Act, 1961 (for short "the Act"), as expenditure incurred wholly and exclusively for the purpose of the appellants business, and not subject to the restrictions on allowability contained in sub-section (3A) thereof. The submission did not find favour with the Income-tax Appellate Tribunal and with the High Court. The High Court, in the order under appeal, followed its earlier judgment in the case of Smith Kline and French (India) Ltd. v. CIT [1992] 193 ITR 582 (which also concerned the assessee). The High Court there had sai....
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....ot an ordinary article of consumption. It is consumed only to get rid of some ailment. Before the drug gets circulated, its reputation will have to be confirmed to the medical practitioners and that is why free samples are supplied to them. If the object of supplying free samples is only to find out the reaction of the medical practitioners about the efficacy or curative value of the drug, the supply of free samples would have been confined during the initial stages of production of a new drug. However, that is not the case of the assessee here. The assessee nowhere contends that free samples were given to the medical practitioners only at the time when a drug is introduced for the first time. Learned counsel for the Revenue also pointed ....
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....stributed drugs. As to the first point, we are entirely in agreement with the view taken in the judgment under appeal. Having regard to the fact that these are prescription drugs, the target for any advertisement or publicity or sales promotion thereof could only be the doctors who would prescribe them. The object, we have no doubt, of distribution of the samples of the drugs to the doctors is to make them aware that such drugs are available in the market in relation to the cure of a particular affliction and, therefore, to persuade them to prescribe the same in appropriate cases. So doing is, in our view, tantamount to publicity and sales promotion. Regarding the submission that the distribution of the physicians' samples of the drugs is m....
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....ubstantially, takes the view the Karnataka High Court had taken in the assessee's case cited above, except that it said "Expenditure of the nature which is essential to the running of the business-a bare minimum to carry on the trade--would not fall within the meaning of the three expressions, i.e., advertisement, publicity and sales promotion. The other expenditure, incurred under any of the three heads, would be within the mischief of the provisions of sub-section (3A) of section 37 of the Act and, therefore, will have to be scaled down." The judgment in Ampro Food Products' case [1995] 215 ITR 904 (AP) was followed by the Andhra Pradesh High Court in CIT v. J and J Dechane Laboratories (P.) Ltd. [1996] 222 ITR 11. This was a case that re....