Commissioner of Income Tax vs India Pistons Ltd.

R. Jayasimha Babu, J.—We do not find any merit in either of the questions proposed by the Revenue. The first question proposed is as to the correctness of the Tribunal''s order in allowing the interest paid for delayed remittance of customs duty as business expenditure. The Tribunal has held that the interest so paid was only compensatory. We have no reason to disagree with the Tribunal. The second question proposed is as to whether the sale of pistons known as shim at a discount, was to the extent of the discount allowed, as sales promotion expense for the purpose of disallowance u/s 37(3A) of the Income Tax Act, 1961. The Tribunal has held that the expenditure was not on sales promotion but it was only an instance of sale of the product at a discount and the coupons which the customer was required to send back to claim the discount were only meant to ensure that the discount reached the ultimate buyer and was not pocketed by the middle man. The discount so given cannot be treated as sales promotion expense. The sales promotion normally refers to an activity which is intended to promote the sale of all the products by way of advertisement or special campaigns. Offering a discount on the price in effect is only an instant of the sale of the company''s product at a lower price and cannot be regarded as expenditure on sales promotion.

This petition is dismissed.