Cit Vs. Klas Engineering (P) Ltd. - Court Judgment

Excerpt:
counsels: m v. seshachala, for the revenue none, for the assessee in the karanataka high court v.k. singhal & t.n. vallinayagam, jj. - sections 13(1) (ia), (ib): [n. kumar & jawad rahim, jj] petition for divorce by wife cruelty and irretrievable break down of marriage death of marital life both emotionally and practically - total desertion for 18 years - abandonment of his wife and son by the respondent - failure to perform matrimonial obligations towards wife and parental obligations towards son mental agony caused to appellant/wife for so many years - prayers for dissolution of her marriage with the respondent held, the material on record clearly establishes that the marriage is irretrievably broken. attempts in reconciliation were not successful. having regard to past experience and material on record, it would be a futile exercise to make any further attempt or reconciliation. the material on record clearly discloses it is the respondent who withdraw from the company of the petitioner without just and sufficient cause. virtually he has abandoned his wife and son and has failed to perform matrimonial obligations towards his wife and parental obligation towards his son who is now aged 20 years. in the circumstances, it can be safely held that a case for divorce is made out. in the instant case the respondent has not contributed anything towards the upbringing of the child and has not cared for his wife; the marriage is dead both emotionally and practically. unfortunately, it is the wife who is seeking divorce; she is not seeking any compensation from the husband; all that she wants is to put an end to the terrible mental agony she is undergoing for so many years. unfortunately, the trial court has dealt with this matter like a civil suit, insisting on adherence to strict rules and evidence to support the said plea and has proceeded to find out whether the conduct of the respondent was harmful and injurious to the petitioner vis--vis bodily injury. this is how it has misdirected itself in approaching the issue of cruelty. hence, the impugned judgment has to be interfered with. appeal as well as petition for divorce was allowed.orderby the courtthe tribunal has referred the following question of law arising out of its order dated 16-4-1992, pertaining to the assessment year 1984-85.'whether, on the facts and in the circumstances of the case, the tribunal is right in law in holding that commission paid on sales is not sales promotion expenditure, and, therefore, provisions of section 37(3a) have no application ?'2. in the assessment the income tax officer had disallowed rs. 3,47,665. that was the amount the assessee had paid towards commission on sales. this had been treated as sales promotion expenses by the income tax officer.the assessee had challenged this finding in appeal filed before the commissioner (appeals). the commissioner (appeals) held that the provisions of section 37(3a) had no application to commission paid on sales. he gave relief to the assessee in this regard. the revenue had raised a ground in the appeal filed to the tribunal.3. the tribunal followed the decision of the calcutta high court in the case of cit v. sutlej cotton mills ltd. : [1992]194itr66(cal) and held that commission payment does not constitute sales promotion expenses and, therefore, disallowance under section 37(3a) was not proper. following the said decision, the tribunal upheld the order of the commissioner (appeals) in this regard.4. the matter is now covered by the decision given in the case of cit v. srinivasa textile processing ltd. (itrc 110/1994, dated 15-1-1997) (2002) 177 ctr (karn) 10 wherein it was observed that 'sales promotion' would have the meaning of 'advertisement, publicity, i.e., by providing certain incentive or taking certain other steps by which the product of the manufacturer could be popularised to promote the sale and would (sic-not) include the amount paid to the commission agent. in view of the above we are of the view that the tribunal is right in law in holding that commission paid on sales is not sales promotion expenditure, and, therefore, provisions of section 37(3a) have no application.reference is accordingly answered in favour of the assessee and against the revenue.sri s. parthasarathi, learned counsel to file the memo of appearance within two weeks.

Judgment:
ORDER

By the Court

The Tribunal has referred the following question of law arising out of its order dated 16-4-1992, pertaining to the assessment year 1984-85.

'Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that commission paid on sales is not sales promotion expenditure, and, therefore, provisions of section 37(3A) have no application ?'

2. In the assessment the Income Tax Officer had disallowed Rs. 3,47,665. That was the amount the assessee had paid towards commission on sales. This had been treated as sales promotion expenses by the Income Tax Officer.

The assessee had challenged this finding in appeal filed before the Commissioner (Appeals). The Commissioner (Appeals) held that the provisions of section 37(3A) had no application to commission paid on sales. He gave relief to the assessee in this regard. The revenue had raised a ground in the appeal filed to the Tribunal.

3. The Tribunal followed the decision of the Calcutta High Court in the case of CIT v. Sutlej Cotton Mills Ltd. : [1992]194ITR66(Cal) and held that commission payment does not constitute sales promotion expenses and, therefore, disallowance under section 37(3A) was not proper. Following the said decision, the Tribunal upheld the order of the Commissioner (Appeals) in this regard.

4. The matter is now covered by the decision given in the case of CIT v. Srinivasa Textile Processing Ltd. (ITRC 110/1994, dated 15-1-1997) (2002) 177 CTR (Karn) 10 wherein it was observed that 'sales promotion' would have the meaning of 'advertisement, publicity, i.e., by providing certain incentive or taking certain other steps by which the product of the manufacturer could be popularised to promote the sale and would (sic-not) include the amount paid to the commission agent. In view of the above we are of the view that the Tribunal is right in law in holding that commission paid on sales is not sales promotion expenditure, and, therefore, provisions of section 37(3A) have no application.

Reference is accordingly answered in favour of the assessee and against the revenue.

Sri S. Parthasarathi, learned counsel to file the memo of appearance within two weeks.