Bombay H.C : Whether the assessee has proved that the presentation articles did not possess advertisement value and, therefore, it was entitled to claim deduction in respect of costs of such articles ?

Counsel Appeared

R.V. Desai with J.P. Deodhar, for the Appellant : P.J. Pardiwalla i/b Mulla and Mulla and Cragie Blunt and Caroe, for the Respondent

JUDGMENT

BY THE COURT :

Appeal admitted. Since a very short point is involved, the appeal is taken up for final hearing and disposed of by this judgment.

2. Two points have been raised by the Department in this appeal : (i) Whether the assessee has proved that the presentation articles did not possess advertisement value and, therefore, it was entitled to claim deduction in respect of costs of such articles ? (ii) Whether the assessee was entitled to deduction in respect of secret commission paid by it ? The facts giving rise to this appeal are as follows : The assessment year in question is 1981-82. The assessee carried on business during the relevant assessment year of dealing in cotton bales on wholesale basis and earning commission, brokerage and service charges on imports and exports of goods arranged by the assessee for its customers in India and abroad. The assessee claimed deduction in respect of thepresentation articles. The AO disallowed the claim under r. 6B. In appeal, however, the Tribunal deleted the said disallowance by applying the ratio of the judgment of this Court in the case of CIT vs. Allana Sons (P) Ltd. (1993) 114 CTR (Bom) 448 : (1995) 216 ITR 690 (Bom). Being aggrieved by the said decision, the present appeal has been filed. At this stage, it may be mentioned that subsequent to the judgment of this Court in the case of Allana & Sons, in the case of Indian Rayon Corporation Ltd. vs. CIT (1998) 146 CTR (Bom) 138 : (1998) 231 ITR 26 (Bom) : TC S17.1895, this Court took the view that the onus was on the assessee to prove that the gift articles did not carry any advertisement value. Hence, it would depend on the facts of each case as to whether the gift articles had any advertisement value. In the present matter, there is nothing to show that the assessee has discharged the above mentioned burden. Hence, the judgment of this Court in the case of Indian Rayon Corporation Ltd. (supra) is squarely applicable. Hence, we set aside the; Judgment of the Tribunal on this point and we hereby remit the matter back to the Tribunal to decide the matter in the light of the judgment of this Court in the case of Indian Rayon Corporation Ltd. (supra). As regards the claim for deduction in respect of secret commission paid by the assessee, it may be mentioned that the appellate authority and the Tribunal has merely proceeded to allow the claim on the ground that, in the past, similar claim of the assessee had been allowed. However, it may be mentioned that, in the past, when the claim of the assessee was allowed, the Explanation to s. 37 which was incorporated by the Finance Act, 1998 with retrospective effect from 1st April, 1962, was not there. One cannot lose sight of the fact that the legislature clearly intended to disallow such claims with retrospective effect i.e. from 1st April, 1962. Under the circumstances, reliance could not have been placed on the orders passed in favour of the assessee in the past. In the circumstances, we remit the matter back to the Tribunal with a direction to decide this point on facts, keeping in mind the object of the above amendment. Accordingly, appeal stands allowed.

No order as to costs.

[Citation : 248 ITR 362]