1993 (12) TMI 25

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....xpenses incurred on special discount and foreign tour expenses are not hit by the said sections 37(3A) and 37(3B) of the said Act and thereby directing to delete the consequential addition made in the assessment ?" The assessee is engaged in carrying on the business of dealers of Beltek T.Vs. This reference relates to the income-tax assessment of the assessee for the assessment year 1984-85. In the course of the assessment proceedings, the Assessing Officer found that the assessee incurred an expenditure of Rs. 2,16,025 debited under the head "Special discount" and another sum of Rs. 1,65,236 debited under the head "Foreign tour expenses". The Assessing Officer noticed that the assessee in terms of its Circular No. 26 of 1983 dated Janua....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Income-tax Act, 1961, and disallowed 20 per cent. thereof in so far as the aggregate expenditure falling under the said two sections exceeded Rs. 1,00,000. This action of the Assessing Officer was confirmed on appeal by the Commissioner of Income-tax (Appeals). On further appeal by the assessee to the Income-tax Appellate Tribunal, it was held by the Tribunal that none of these two items of expenses could be regarded as sales promotion expenses. The Tribunal noted that the special discount was allowed by the assessee on the sale of T. Vs. to its sub-dealers depending on the target of specified number of T. V. sets purchased by the sub dealers during the relevant period as notified in the circulars. Similarly, the expenses on foreign tours w....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....d publicity. A manufacturer of a product may intend to further the popularity or sales by publicising or advertising or by several other modes and that would be sales promotion, but the cost incurred to merely sell the product will not come within the purview of "sales promotion". The expression "sales promotion" is preceded by the words "advertisement" and "publicity" in clause (i) of sub-section (3B) of section 37. Here, the legal maxim of ejusdem generis is of aid. The maxim seeks to restrict the meaning of a general word to things or matters of the same genus as the preceding particular words. Thus, where the statute imposes restriction on advertisement, publicity and sales promotion, the expression "sales promotion" cannot include the ....