200 PLP 3828 (PTD)
COMMISSIONER OF INCOME‑TAX Versus THANGAMALIGAI & CO.
| Citation | 200 PLP 3828 (PTD) |
| Forum / Court | 241 I T R 525 |
| Bench Members | N/A |
| Parties | COMMISSIONER OF INCOME‑TAX Versus THANGAMALIGAI & CO. |
| Primary Law | Income‑tax‑‑‑ |
Q1: What are the key laws and sections cited in 200 PLP 3828 (PTD)?
This judgment primarily cites: Income‑tax‑‑‑ as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 200 PLP 3828 (PTD)?
The case was heard and decided by the 241 I T R 525 bench comprising: N/A.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 200 PLP 3828 (PTD) (COMMISSIONER OF INCOME‑TAX Versus THANGAMALIGAI & CO.). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Headnotes / Summary
‑‑‑‑Reference‑‑‑Business expenditure‑‑‑Disallowance of expenditure‑‑ Expenditure on sales promotion‑‑‑Expenditure whether incurred on sales promotion is a question of fact‑‑‑Assessee running jewellery business‑‑ Finding by Tribunal that chit incentive expenditure and chit expenditure did not constitute expenditure on sales promotion-‑‑Finding of fact‑‑‑No question of law arose‑‑‑Indian Income Tax Act, 1961, Ss.37(3A), (3B) & 256(2). Held, dismissing the application for directing reference, that a joint reading of subsections (3A) and (3B) of, section 37 of the Income Tax Act, 1961, makes it clear what shall not be allowed as a deduction in computing the income chargeable under the head "profits and gains of business or profession". If the correct expenditure incurred by the assessee on any one or more of the items specified in subsection (3B) exceeds one hundred thousand rupees, then twenty per cent. of such excess shall not be allowed as a deduction income computing the income chargeable under the head "profits and gains of business or profession". What shall not be allowed depends on an ascertainment of facts. In the instant case, the assessee was engaged in the business of purchase and sale of gold and silver wares. The Tribunal had found that chit incentive expenses and chit expenses incurred by the assessee could not be considered to be sales promotion expenditure. liable to be disallowed under section 37(3A). This was a finding of fact. No question of law arose from it. Mrs. Chitra Venkataraman for C.V. Rajan for the Commissioner. Mrs. Pushya Sitaraman for the Assessee.
Judgment & Decree
Subsection (3A) of section 37 of the Income Tax Act, 1961 (Act No. 43 of 1961‑‑‑for short "IT Act"), which was inserted by the Finance Act, 1983, with effect from April 1, 1984, and omitted by the Finance Act, 1985, with effect from April 1, 1986, reads as under: "(3A) Notwithstanding anything contained in subsection (1), where the expenditure or, as the case may be, the aggregate expenditure incurred by an assessee on an one or more of the items specified in subsection (3B) exceeds one hundred thousand rupees, twenty per cent. of such excess shall not be allowed as deduction in computing the income chargeable under the head 'Profits and gains of business or profession'. " Subsection (3B) of section 37 thereof, inserted by the Finance Act, 1983, with effect from April 1, 1984, and omitted by the Finance Act, 1985, with effect from April 1, 1986, reads as under: "(3B) The expenditure, referred to in subsection (3A) is that incurred on‑‑ (i) advertisement, publicity and sales promotion; or (ii) running and maintenance of aircraft and motor cars; or (iii) payments made to hotels. Explanation.‑‑‑For the purpose's of subsections (3A) and (3B).,‑‑‑ (a) the expenditure specified in clause (i) to clause (iii) of sub section (3B) shall be the aggregate amount of expenditure incurred by the assessee as reduced by so much of such expenditure as is not allowed under any other provision of this Act: (b) expenditure on advertisement, publicity and sales promotion shall not include remuneration paid to employees of the assessee engaged in one or more of the said activities; (c) expenditure on running and maintenance of aircraft and motor cars shall include,‑‑‑ (i) expenditure incurred on chartering any aircraft and expenditure on hire charges for engaging cars plied for hire; (ii) conveyance allowance paid to employees and, where the assessee is a company, conveyance allowance paid to its directors also." A conjoint reading of subsections (3A) and (3B) of section 37 of the Income‑tax Act, makes it crystal clear what shall not be allowed as a deduction in computing the income chargeable under the head "profits and gains of business or profession". If the correct expenditure incurred by the assessee on any one or more of the items specified in subsection (3B) exceeds one hundred thousand rupees, then twenty per cent. of such excess shall not be allowed as a deduction in computing the income chargeable under the head "Profits and gains of business or profession". It is thus crystal clear that what shall not be allowed as a deduction in computing the income chargeable under the head "Profits and gains of business or profession" is, after all, an ascertainment of fact from the accounts of the assessee‑dealers and nothing further. Therefore, the order of the Tribunal in rejecting the reference, not as a pure question of law, cannot at all be found fault with. In this view of the matter, this reference application deserved to be dismissed and the same is accordingly dismissed. M.B.A./660/FC Application dismissed.