2002 PLP 1677 (PTD)
SALEM DISTRICT LORRY OWNERS ASSOCIATION Versus COMMISSIONER OF INCOME-TAX
| Citation | 2002 PLP 1677 (PTD) |
| Forum / Court | 242 I T R 458 |
| Bench Members | R. Jayasimha Babu and Mrs. A. Subbulakshamy, JJ |
| Parties | SALEM DISTRICT LORRY OWNERS ASSOCIATION Versus COMMISSIONER OF INCOME-TAX |
| Primary Law | Income-tax |
Q1: What are the key laws and sections cited in 2002 PLP 1677 (PTD)?
This judgment primarily cites: Income-tax as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 2002 PLP 1677 (PTD)?
The case was heard and decided by the 242 I T R 458 bench comprising: R. Jayasimha Babu and Mrs. A. Subbulakshamy, JJ.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 2002 PLP 1677 (PTD) (SALEM DISTRICT LORRY OWNERS ASSOCIATION Versus COMMISSIONER OF INCOME-TAX). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Headnotes / Summary
Claim that articles had been distributed to customers as sales incentive
Finding that there had been an indirect distribution of profits among members of assessee-association-- Expenditure on articles was not deductible
Indian Income Tax Act, 1961, S.37. The assessee was an association of persons deriving income from two petrol bunks. It had made a profit of Rs.1,64,000 for the assessment year 1982-83 according to the return filed by it. That amount was arrived at after debiting the sum of Rs.66,820 as sales promotion expenditure or sales incentive to. customers. The claim so made was ,disallowed by the Income-tax Officer. He held that this was only a method of distributing the profits among the members. The articles even according to the assessee were distributed among the number and ex- members. The number of ex-members was not specified by the assessee. The value of the articles so distributed was over 30 per cent. of the amount value as profit for the year. The expenditure was disallowed by the Assessing Officer and the Tribunal. On a reference: Held, that the Tribunal had on a question of fact held that the objection of distribution was only to enable the recipients to share the profits of the business of the assessee for the year and was not a genuine expenditure on giving sales incentives. The expenditure was not deductible: R. Janakiraman for the Assessee. S.V. Subramaniam for the Commissioner
Judgment & Decree
R. JAYASIMHA BABU, J.
The assessee is aggrieved by the order of the Tribunal, which had held that a sum of Rs. 66,820 debited to the profit and loss account as sales incentive to customers is not a deductible item of expenditure. At the instance of the assessee, the following question of law has been referred to us for our consideration: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding and had valid materials to hold that the expenditure of Rs.66,820 was not incurred wholly and exclusively for the purpose of the assessee's business?" The assessee is an association of persons deriving income from two petrol bunks. It had made a profit of Rs.1,64,000 for the assessment year 1982-83 according to the return filed by it. That amount was arrived at after debiting the sum of Rs.66,820 as sales promotion expenditure or sales incentive to customers. The claim so made was disallowed by the Income-tax Officer. He held that this was only a method of distributing the profits among the members. The articles even according to the assessee were distributed among the members and ex-members. The number of ex-members was not specified by the assessee. The value of the articles so distributed is over 30 per cent. of the amount shown as profit for the year. Such a high proportion of the income being distributed among the members and non-members is that fashion certainly warranted the matter being examined more closely. The assessee, however, did not place any more material before the Assessing Officer to satisfy him that it was in fact genuine incentive and not an indirect distribution of the profits of the year among the members. The assessee appealed to the Commissioner, who reversed the order of the Income-tax Officer. The Revenue appealed to the Tribunal. The Tribunal has restored the order of the Assessing Officer, and, inter alia, pointed out that the distribution was of made on the basis of purchases made by the recipients of the articles, but on account of the fact that they were member or ex-members. No material has been placed at any point of the proceedings by the assessee to show the benefit derived from such presents and as to why it was limited to members and ex-members. The Tribunal has on a question of fact held, that the object of the distribution was only to enable the recipients to share the profits of the business of the assessee for that year and was not a genuine expenditure on giving sales incentives. We do not see any error in the order of the Tribunal. The question referred to us is answered against the assessee and in favour of the revenue. M.B.A./709/FC Reference answered.