- (1.) This appeal was admitted by an order dated 8-10-2001, on the' following substantial question of law: Whether the findings of the Tribunal upholding the disallowance of 50 per cent, of the sales promotion expenses incurred in the assessment years 1990-91 (Rs. 10,20,808) and 1991-92 (Rs. 11,43,430) for free distribution of gift articles along with the appellants product are based on any material or evidence and/or have been arrived at by ignoring and not considering the relevant material recorded and found by the Commissioner of Income-tax (Appeals) in his appellate orders and/or are otherwise unreasonable, arbitrary and perverse ? No one appears for the respondent despite service. We, however, got the advantage of assistance of Dr. Pal appearing for the appellant.
(2.) The short fact is that the appellant has been and still is carrying on purchasing and selling and/or otherwise dealing in tea and tea products. While carrying on such business the appellant adopts various methods of promotion of sale of their products. In doing so, the appellant had adopted a policy to augment the sale and for the growth of their business to woo the customers distributing the gift articles. As such these gift articles, viz., detergent, soaps, ball pens and other gift items were purchased and the cost of such purchase of this gift items are shown in their return as the business expenditure.
(3.) The Assessing Officer considering the materials placed before him and also having examined the same, had disallowed 50 per cent, of the amount claimed for deduction of the cost of such gift articles as business expenditure and 50 per cent, was allowed. The appellant being aggrieved by the said decision of the Assessing Officer took this matter to the Commissioner of Income-tax (Appeals). The appellate authority, who examining the judgment and order of the Assessing Officer and going through the evidence, found that the claim for deduction of business expenditure on account of purchase of gift articles was genuine and the entire cost was allowed. Therefore, the first appellate authority deleted the 50 per cent, disallowance of the cost of the gift articles.;