Viswanatha Iyer, J.:— Out of the three questions, of which the revenue sought reference to this court, question No. 1 has already been referred under S. 256(1). Question No. 2 is one on which we have directed reference in similar other cases. So far as question No. 3 is concerned, the facts are that the assessee had paid commission to certain persons for procuring orders for its products. The payments were made after the sales were effected the assessing authority treated these payments as sales promotion expenses falling under S. 37(3B) of the Income Tax Act, 1961 to which S. 37(3A) applied. The Commissioner, on appeal, took the view that the payment so made was sales commission, and not sales promotion expenses, and therefore the assessee was entitled to deduction of the entire amount This was affirmed in appeal by the Tribunal. The revenue therefore seeks reference of the question whether the payments so made should not be treated as sales promotion expenses, attracting the provisions of S. 37(3A).
2. Having heard counsel for the parties, we are satisfied that no question of law arises out of this finding of the Tribunal. The amount was paid as commission to representatives of the assessee who procured orders from prospective customers and brought about sales. The payment is made only if and when the sales are effected, and not otherwise. They are related only to sales. The position of the representatives is that of mere agents canvassing orders, who are remunerated according to the work done and orders procured by them. No doubt, it is intended to enhance and improve the business and sales promotion is an activity, which will promote the sales of the assessee; but it is not a sales promotion activity.
3. Sub-clause (i) of sub-section (3B) speaks of advertisement, publicity and sales promotion. Read in the context, sales of the assessee by reason of the advertisement and publicity that will be attendant on it; or by reason of the incenti ves or other attractions offered to attract customers for the assessee's products. Payment of commission to representatives is in effect remuneration for work done which will not be sales promotion expenses hit by the limitation in S. 37(3A). We are not therefore inclined to refer question No. 3 sought by the revenue.
4. Accordingly, we direct the Income-tax Appellate Tribunal, Cochin Bench to state a case and refer the following question of law (question No. 2 sought by the revenue) for the opinion of this court under S. 256(2) of the Income Tax Act, 1961, namely:
“Whether, on the facts and in the circumstances of the case, the assessee is entitled to investment allowance under S. 32A of the Income Tax Act, 1961 ?”
5. Communicate a copy of this judgment under the seal of this court and signature of the Registrar to the Income-tax Appellate Tribunal, Cochin Bench for information and compliance.