R. Jayasimha Babu, J.@mdashThe assessee is aggrieved by the order of the Tribunal, which had held that a sum of Rs. 66,820 debited to the profit and loss account as sales incentive to customers is not a deductible item of expenditure. At the instance of the assessee, the following question of law has been referred to us for our consideration :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding and had valid materials to hold that the expenditure of Rs. 66,820 was not incurred wholly and exclusively for the purpose of the assessee''s business ?"
2. The assessee is an association of persons deriving income from two petrol bunks. It had made a profit of Rs. 1,64,000 for the assessment year 1982-83 according to the return filed by it. That amount was arrived at after debiting the sum of Rs. 66,820 as sales promotion expenditure or sales incentive to customers. The claim so made was disallowed by the Income tax Officer. He held that this was only a method of distributing the profits among the members. The articles even according to the assessee were distributed among the members and ex-members. The number of ex-members was not specified by the assessee. The value of the articles so distributed is over 30 per cent. of the amount shown as profit for the year. Such a high proportion of the income being distributed among the members and non-members in that fashion certainly warranted the matter being examined more closely. The assessee, however, did not place any more material before the Assessing Officer to satisfy him that it was in fact genuine incentive and not an indirect distribution of the profits of the year among the members.
3. The assessee appealed to the Commissioner, who reversed the order of the Income Tax Officer. The Revenue appealed to the Tribunal. The Tribunal has restored the order of the Assessing Officer, and, inter alia, pointed out that the distribution was not made on the basis of purchases made by the recipients of the articles, but on account of the fact that they were members or ex-members. No material has been placed at any point of the proceedings by the assessee to show the benefit derived from such presents and as to why it was limited to members and ex-members.
4. The Tribunal has on a question of fact held, that the object of the distribution was only to enable the recipients to share the profits of the business of the assessee for that year and was not a genuine expenditure on giving sales incentives.
5. We do not see any error in the order of the Tribunal. The question referred to us is answered against the assessee and in favour of the Revenue.
