- (1.) ON an application under S. 256(1) of the IT Act, 1961, the Tribunal has referred the following question for our opinion : "Whether, on the facts and in the circumstances of the case, the expenditure incurred by the assessee on free samples and technical literature was hit by the provisions of S. 37(3A) of the IT Act, 1961 ?"
(2.) THE assessee is a manufacturer and seller of drugs and pharmaceutical products. The assessment year involved is 1985-86 for which the accounting year ended on 30th June, 1984. During the previous year assessee has incurred expenditure on technical literatures and samples and claimed an amount on that expenditure to the tune of Rs. 9,29,545 on literature and Rs. 12,41,343 on samples. ITO has applied the provisions of S. 37(3A) of the Act, 1961 and disallowed part of the expenditure claimed by the assessee, by applying the provision of sub-s. (3A) of S. 37 of the Act, 1961. At the outset learned counsel for the assessee submits that whether any expenditure on medical journal or literature can be disallowed under sub-s. (3A) of S. 37 of the Act. This Court has considered the similar issue in Griffen Laboratories Ltd. vs. CIT (2000) 161 CTR (Cal) 98 : (2000) 244 ITR 68 (Cal) and has taken the view that no such expenditure could be disallowed under sub-s. (3A) of S. 37. He further submits so far the expenditure on samples is concerned, the issue is now concluded by the Supreme Court in the case of Eskayef vs. CIT (2000) 162 CTR (SC) 89 : (2000) 245 ITR 116 (SC) wherein their Lordships have taken the view that in case of expenditure on samples the provisions of sub-s. (3A) of S. 37 is applicable.
(3.) CONSIDERING the submission and aforesaid undisputed facts following the decision of the apex Court in case of Eskayef (supra) we answer the question on medical samples in affirmative i.e., in favour of the Revenue and against the assessee.;