Income Tax Appellate Tribunal - Delhi
Deputy Commissioner Of Income Tax vs Asian Hotels Ltd. on 25 February, 1999
ORDER
U.B.S. Bedi, J.M.
1. These are two appeals of the Revenue directed against separate orders of appeal of CIT(A)-XIV, New Delhi dt. 13th July, 1990, and 7th August, 1991, relating to asst. yrs. 1985-86 and 1986-87 respectively and these appeals since involve similar facts and identical points. So these are consolidated and disposed of by a single order for the sake of convenience.
2. In ITA No. 7699 (Del) 1990 the following grounds have been raised :
"On the facts and in the circumstances of the case, the learned CIT(A) has erred in :
(a) directing the AO to allow assessee-company's claim of investment allowance on plant and machinery amounting to Rs. 3,57,69,003 by ignoring the material fact that the assessee-company is engaged in hotel business which is not an industrial undertaking and as such is not eligible for such an allowance; and
(b) directing the AO not to include a sum of Rs. 3,92,758 paid by the assessee-company as commission to travel agents for the purposes of working out the disallowance under s. 37(3A) of the IT Act, 1961."
3. Similarly, in ITA No. 7415 (Del) 1991 the following grounds have been raised :
"On the facts and in the circumstances of the case, the learned CIT(A) has erred in :
(1) directing the AO to allow assessee's claim of investment allowance on plant and machinery amounting to Rs. 12,72,821 by ignoring the material fact that the assessee is in hotel business which is not an industrial undertaking and as such is not eligible for such allowance; and (2) directing the AO to allow investment allowance on plant and machinery of Rs. 12,72,821, ignoring the order of the Hon'ble Tribunal in the case of Siddharth Intercontinental for asst. yr. 1984-85 [ITA No. 4307 (Del) 1987 dt. 31st May, 1991] where the Hon'ble Tribunal has held that only plant and machinery installed in the kitchen of hotel is eligible for investment allowance."
4. With regard to ground No. (a) for asst. yr. 1985-86 and grounds Nos. 1 and 2 for asst. yr. 1986-87 relate to investment allowance, the facts are like this that for the asst. yr. 1985-86 AO rejected the claim of investment allowance on plant and machinery at Rs. 3,57,69,003 on the ground that hotels are not industrial undertakings as defined in the IT Act and plant and machinery are not being used for the purpose of business of construction, manufacture or production of any articles or thing. Similarly, for the asst. yr. 1986-87 assessee's claim on investment allowance on plant and machineries amounting to Rs. 12,72,821 was rejected by the AO on the basis and reasonings as given for the earlier year. Assessee preferred appeals against the order of AO rejecting the claim of investment allowance in each of these years and pleaded before the first appellate authority that the business of hotel has been declared by the Ministry of Tourism, Government of India, as an industry and thus all benefits available to other industrial undertakings are extended to the hotels as well. He further submitted before the first appellate authority that according to various High Court decisions, machinery, equipment and other systems, sanitary and pipeline fittings installed at the hotel constitute plant and reliance was placed on CIT vs. Taj Mahal Hotel (1971) 82 ITR 44 (SC). Based on the above decisions the assessee had claimed deduction of investment allowance @ 25 per cent of the cost of plant and machinery and a reserve had also been created equivalent to 75 per cent of the claim for deduction of investment allowance. That issue was also settled in the case of Oriental Express (P) Ltd. by the Tribunal, Delhi Benches in ITA No. 235(Del) 1984, in Orient Express Co. (P) Ltd. vs. IAC (1985) 23 TTJ (Del) 597 : (1985) 14 ITD 506 (Del) holding that the assessee engaged in running of business of hotel was entitled to deduction of investment allowance as provided under s. 32A of the IT Act, 1961 as running of hotel constitutes an industrial undertaking.
5. The learned CIT(A) while accepting the contention of the assessee has concluded in para 2.2 of her order as under :
"2.2 I have carefully gone through the submissions of the assessee as also the facts of the case. Following the decision of the Hon'ble Tribunal, Delhi Benches, as referred to above, I find force in the appellant's contentions that hotel is considered as an industrial undertaking and accordingly, investment allowance under s. 32A is to be allowed to the assessee-company since installation of machinery as well as creation of reserve have been admitted by the AO in the assessment order. The appellant's claim of investment allowance is, therefore, allowed."
6. This order for asst. yr. 1985-86 was followed by the CIT(A) in appeal for asst. yr. 1986-87 and similar claim of investment allowance was allowed to the assessee.
7. Aggrieved by these orders of first appellant authority Revenue has come up in appeals and it was pleaded that assessee as such is not manufacturing any thing or article and in view of relevant provisions of law investment allowance cannot be allowed to the assessee. Attention was invited to proviso to s. 32A(1) of the IT Act and it was pleaded that investment allowance has been excluded from the purview of hotel. It was submitted that hotel cannot be treated as industrial undertaking in view of provisions as contained in s. 32A(2)(b)(iii). Similarly, Sch. 11, item 22 debars allowing of such claim. Reliance was placed on CIT vs. S.P. Jaiswal Estates (P) Ltd. (1992) 196 ITR 179 (Cal) at pp. 182, 185. Similarly in CIT vs. Casino (P) Ltd. (1973) 91 ITR 289 (Ker) and ss. 80HH, 80-I and 80G (sic) also excludes hotel and in s. 32A hotel is conspicuous by its absence. Reliance was placed on the decision of Hon'ble Supreme Court in the case of CIT vs. N.C. Budharaja & Co. & Anr. (1993) 204 ITR 412 (SC) and Builders Association vs. Union of India & Ors. (1994) 209 ITR 877 (SC). Similarly reliance was also placed on CIT vs. Berry's Hotels (P) Ltd. (1994) 207 ITR 615 (Bom) and it was pleaded that neither assessee was manufacturing any item or thing nor hotel can be treated as industry for the purpose of s. 32A of the IT Act. Therefore, AO was fully justified in disallowing the claim as made by the assessee and CIT(A) was not justified in reversing the order of AO. Therefore, it was pleaded for restoration of the order of AO by setting aside the order of CIT(A).
8. The learned counsel for the assessee while relying upon the order of CIT(A) has pleaded for confirmation of her order. Reliance was placed on CIT vs. Trinity Hospital (1997) 225 ITR 178 (Raj), Navratan Lal Amba Lal Dave vs. CIT (1997) 225 ITR 936 (Guj), CIT vs. Dr. V. K. Ramachandra (1981) 128 ITR 727 (Mad), CIT vs. Hotel Belle Vue (P) Ltd. (1997) 223 ITR 675 (Gau), East India Hotels Ltd. vs. CIT (1997) 223 ITR 1 (SC). It was pleaded that beneficial legislation should be interpreted in favour of the assessee and so far as reference in ss. 80-I, 80J, etc. is concerned, the entire income is to be taken for consideration and there is no mention which could support the view of the Revenue to interpret exclusion of investment allowance in the case of hotels. Since assessee is manufacturing food articles which are covered by the definition of "article" and "things" and as per Government notification hotels have been held to be industrial undertaking, therefore, claim of the assessee is justified and CIT(A) has justifiably allowed such claim and the same needs to be confirmed.
9. To counter these submissions the learned Departmental Representative submitted that the case law relied upon by the assessee's counsel is distinguishable on facts and mostly cases relied upon by the assessee's counsel are pertaining to hospital's case and there is no direct case law except (1997) 223 ITR 675 (Guj) (supra) which pertains to kitchen equipment only and not the entire hotel whereas other High Courts have taken different views and reasoning given by those High Courts are found to be more reasonable, logical and rational. Thus, the ratio of these decisions deserves to be applied in the case in hand. So far as beneficial legislation is concerned, it was held in the cases relied upon that literal interpretation should be avoided but in this regard also there are divergent opinions. It was thus pleaded for setting aside of the order of CIT(A) and restoration of the order of AO.
10. We have heard rival submissions, perused the record, gone through the relevant provisions and also orders of authorities below. We have carefully considered the submissions of both sides in the light of relevant case law cited and facts brought to our notice. The assessee is a hotelier in this case. In respect of certain machinery installed which are in the nature of music, T.V. and cinematograph, computers, generators, elevators, air-conditioning and cold storage, coolers and refrigerators, kitchen equipment and installation, laundry equipment and installation, water systems and sanitary installation, electrical equipments and installations, fire protection equipment, telephone equipment (local), health club equipment (Local), house-keeping assorted equipment (imported), health club equipment (imported), telephone system (imported) and beauty parlour and barber shop (imported) valued at Rs. 14,30,76,004. 00 as per A-6 attached to the balance sheet as on 30th September, 1984, and on which investment allowance @ 25 per cent under s. 32A was claimed at Rs. 3,57,69,003 for the asst. yr. 1985-86 and similarly Rs. 12,72,821 claimed for the asst. yr. 1986-87. The claim of the assessee was not accepted by the AO but on appeal the said view of the AO was reversed by the learned CIT(A) and amounts claimed as investment allowance were allowed at first appellate stage. Now the question arises as to whether it could be said that the hotelier produces the goods for serving its customers in a restaurant attached with the hotel by manufacturing or processing them. Manufacture is a process which results in an alteration or change in goods which are subjected to such manufacture. A commercially new different article is produced may be that it is produced by manual labour or mechanical force or even by nature's own process such as drying by heat of the sun in a salt pan or by fermentation. The essential question is whether a commodity which, in a commercial sense, is different from the raw material has resulted due to manufacture. It is an accepted proposition that meaning of "manufacture" has to be considered with reference to the context of the enactment. The mere fact that the foodstuffs produced in its hotel using raw materials such as pulses, meat, wheat and the like, are commercially different from such materials is a matter on which there cannot be any scope for controversy. It is for this reason that the assessee urges that it is an 'industrial company' as, according to it, the accepted test stands satisfied. But, we have to remember that the term must be understood in the context of the enactment. We will have to see whether persons concerned, the customers of the hotel and the employees, would employ the term in the sense in which it is sought to be construed. The particular provision of the Finance Act with which we are concerned here prescribes deduction by way of investment allowance and the assessee seeks to be included within the definition of the term 'industrial company', so as to get the benefit of the said allowance as prescribed. This benefit is given only to industrial companies which satisfy certain requirements. The four categories of companies which are included in the scope of the term are those mainly engaged in the business of generation or distribution of electricity or any other form of power or mainly engaged in the construction of ships or similarly engaged in mining or in the manufacture or processing of the goods. The context is apparent from this definition. The question ultimately would be whether in common parlance the activity of the assessee could be said to be one of manufacture or processing of the goods, whatever may be the technical meaning of the term. The assessee is dealing every day with his customers. And if we look at the practical aspect, could it be said that the customers visiting the assessee's hotel would ask for the items in the menu list to be manufactured and supplied to them. We do not think that it would be appropriate to refer, in the ordinary sense in which we understand in the English language, to the production of food materials in the assessee's hotel as manufacture. Similarly, any customer visiting a hotel would ask to be supplied with the food and beverages that is for sale in the hotel and if the waiter were to tell the customer that his order is being 'manufactured', it is likely that the customer would feel something odd and strange about it. It would not practically pass off, normally, unnoticed. Equally so the customer may not also appreciate if he is told that the wheat or the meat which are used as raw materials are being 'processed' as we understand the term ordinarily. 'Processing', in such context, would mean something less than the complete loss of identity of the goods which is the case when the food materials are prepared in the hotel. Hence, if construction of the term in the popular sense is the test to be applied, we do not think that it is possible to say that the assessee manufactures or processes goods in its hotel. The definition is always subject to context and expression "manufacture" does not connote a trading activity and an activity carried on in a hotel can only be taken to be a trading activity and not a manufacturing activity.
11. Having thus seen broad distinction between "manufacture" and "processing", we may now turn to the facts of the case. In the restaurant the menu list contains different varieties of food and beverages. Some preparations offered to customers are the mixtures of a number of articles of food such as lemon water with salt. It is quite common that some readymade drinks and food are also offered which never undergo any processing or handling by the workmen. Some preparations, however, may undergo some kind of processing. It is also a fact that there is no evidence of the income separately attributable to such preparations. In the absence of such evidence, the assessee's claim that the entire income from the restaurant section could be attributable to activities falling within the meaning of "manufacture" or "processing" of goods cannot, therefore, be entertained. It is also noticed that in s. 80J, prior to its omission vide Finance Act, 1996, hotel is included along with industrial undertakings for the purpose of relief under the said section and obviously it is indicative that the Act itself made a distinction between an industrial undertaking and the business of a hotel.
12. In the case of Delhi Cold Storage (P) Ltd. vs. CIT (1991) 191 ITR 656 (SC), the Supreme Court held that no processing is involved in a cold storage plant. The processing is understood as an action which brings forth some change or alteration of the goods or material subject to the act of processing. Even as a result of long duration of storage vegetables, fruits and other articles which require preservation do not undergo any processing.
13. Under s. 32A(1), investment allowance is granted with reference to the subject-matter on which an assessee invests, such as ship or an aircraft or machinery or plant specified in sub-s. (2). The assessee should own the subject (here the machinery) and the said machinery is to be wholly used for the purposes of the business carried on by him. As per sub-s. (2), the machinery referred to in sub-s. (1) shall be the one enumerated in sub-s. (2). Clause (b) of this sub-section, inter alia, states that the machinery installed in an industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule is machinery that would be covered by sub-s. (1). Sec. 32A nowhere defines the term "industrial undertaking". The assessee may carry on many kinds of business including industrial activities. The industrial activity of the assessee may be of a minor character when compared to the main activity of the assessee. So long as the machinery is owned by the assessee and the said machinery is installed in any industrial undertaking, subject to the condition that the machinery is used for the purposes of the business of the assessee, the assessee is entitled to the benefit of s. 32A. Sub-s. (2) of s. 32A enumerates the machinery, etc. in respect of which an assessee could claim the benefit of s. 32A(1), subject to other conditions. The primary requirement to be satisfied under s. 32A(2) is that the installation of the machinery is to be in an industrial undertaking and, therefore, the real question is to find out whether the hotel is an industrial undertaking.
14. It is no doubt true that a hotel also produces eatables from raw materials like vegetables meat, fish, spices and so on, for catering to the needs of the customers. But such manufacturing or production of goods that may be involved therein is only incidental or ancillary to the business of hotel keeping. Apart from meals, a hotel provides entertainment and various personal services, with halls for drinking, dancing, exhibitions and group meetings with shops having both inside and streetside entrances and offering for sale items such as clothes, gifts, candy, theatre tickets, travel tickets. There are also ancillary activities; but they do not fall in the activity of manufacture or production. The basic ingredient of hotel keeping is providing lodging or maintaining a building consisting of many rooms for overnight accommodation which has nothing to do with any manufacturing or producing article or thing. The formidable difficulty that the assessee's claim for the investment allowance has to overcome is the fact that preparation and supply of goods by a restaurant and the same act by a hotel keeper does not stand on the same footing. Particularly when pitted against the expression used by the legislature in sub-cl. (iii) of cl. (b) of sub-s. (2) of s. 32A, the assessee who claims investment allowance has to be an assessee carrying on the business of manufacturing or producing any article or thing. Therefore, the business itself has to be that of manufacture or production. This is apparent from the contradiction maintained by other sections of the Act where a manufacturing or producing undertaking stands apart from the business of a hotel.
15. In North India Caterers (India) Ltd. vs. Lt. Governor of Delhi (1978) 42 STC 386 (SC), the Supreme Court had an occasion to consider the nature of the hotel business. After tracing the origin and historic development of hotel business, the Supreme Court pointed out that sale of eatables is incidental to the services rendered in a hotel and, therefore, it was not a case of sale of goods. Relying on the observations of the Hon'ble Supreme Court in the above referred case it can safely be held that the preparation of food articles in a hotel is also incidental to rendering of the service at the hotel, whether it is a restaurant or a lodging house. Therefore, it cannot be said that a hotel is an industrial undertaking.
16. The assessee's case is that it has installed machinery to manufacture or produce food articles. It has installed it in the hotel or probably in a space which is convenient for the purpose of producing or manufacturing the food articles. Sec. 32A(2)(b)(iii) requires that the machinery should be installed in any industrial undertaking; therefore, the installation should be at a place which can be described as an industrial undertaking. Therefore, assessee is entitled to investment allowance as claimed.
17. Sec. 80J(1) prior to its omission refers to an "industrial undertaking" and "the business of a hotel" separately, which is an indication that a hotel is not an "industrial undertaking" for the purposes of the Act, unless specifically stated to be so. So, in our considered view, installation of the machinery, in the instant case, is in a hotel, which is a trading concern and not in an industrial undertaking. Since the business of running a hotel is essentially a trading activity, where no production or manufacture of article is involved, therefore, machinery installed at hotel business cannot be termed as "machinery" or "plant" specified in sub-s. (2) of s. 32A of the IT Act.
18. On a plain reading of s. 32A of the IT Act it is clear that the business of manufacture or production of goods has to be carried on by the assessee for getting the benefit of s. 32A. If the plant and machinery referred to in sub-s. (2) of s. 32A are used in manufacture or processing of goods and such manufactured goods are used in the business of the assessee wholly owned by him, then the assessee shall be entitled to the benefit of s. 32A. In its ordinary meaning "manufacture" is a process by which an alteration or change takes place in the goods which are subjected to such manufacture. In fact it is well established that in the absence of any definition in the statute, words occurring in a statute will have to be understood with reference to the objects of the Act and in the context in which they occur. Consequently, the definitions given for the words in one statute cannot automatically be imported for interpreting the same words in another statute e.g., interpretation of the expression "manufacturing process" for purposes of the Factories Act, 1948, will not be relevant in construing the same expression for the purposes of the Finance Act, 1966. The preparation of eatables cannot be taken to be manufacture of goods. The words "goods" used in s. 2(7)(d) of the Finance Act, 1966, has been used in the sense of merchandise, i.e., articles for sale, and so understood in a commercial sense, the expression "goods" will not include eatables prepared in a hotel. Further, the expression "manufacture" does not connote a trading activity and an activity carried on in a hotel can only be taken to be a trading activity and not a manufacturing activity. The term "manufacture or processing of goods" has not been defined by the Finance Act, 1968. In its ordinary meaning "manufacture" is a process which results in an alteration or change in the goods which are subjected to such manufacture. A commercially new article is produced. The production may be by manual force, mechanical force or even by nature's own process such as drying by heat of the sun as in a salt pan. The real test is to see whether a commodity which in a commercial sense is different from the raw materials has resulted due to the manufacture. "Processing" has in one sense a wider meaning than the term manufacture. But, in the context of the Finance Act, 1968, a hotel is mainly a trading concern. It would not be appropriate in the ordinary sense to refer to the production of food materials in a hotel as manufacture. The activity carried on in preparing articles of food from raw materials in a hotel would not constitute "manufacture or processing of goods". Similarly, in the case of CIT vs. S.P. Jaiswal Estates (P) Ltd. (supra), the Hon'ble Calcutta High Court has held as under :
"Wherever a commodity undergoes a change as a result of some operation performed on it or in regard to it, such operation would amount to processing of the commodity. The nature and extent of the change is not material. Whatever be the means employed for the purpose of carrying out the operation, it is the effect of the operation on the commodity that is material for the purpose of determining whether the operation constitutes processing.
An assessee who claims investment allowance under s. 32A of the IT Act, 1961, has to be an industrial undertaking carrying on the business of manufacturing or producing any article or thing. Therefore, the business itself has to be that of manufacture or production.
The definition of industrial company requires a fact situation hardly different from that requisite for investment allowance. There are only two basic variations : firstly, investment allowance relates to both corporate and non-corporate assessees and secondly, the industrial company is to be mainly manufacturing or processing goods or things but an eligible assessee under s. 32A is to be wholly manufacturing or producing goods or things. The provisions of s. 32A limit the benefit only to an industrial undertaking whose business consists of, inter alia, manufacture or production of any article or thing. Thus, processing of an article or thing is outside the scope of this provision.
The business of a hotel is essentially a non-manufacturing or non-producing or even non-processing concern and is a trading concern. The business of a hotel is distinct and separate from an industrial undertaking manufacturing or producing articles. Though a hotel also produces eatables from raw materials, such manufacturing or production of goods that may be involved therein is only incidental or ancillary to the business of hotel keeping.
Apart from meals, a hotel also provides entertainment and various personal services, with halls for drinking, dancing, exhibitions and group meetings with shops offering for sale items such as gifts, theatre tickets, travel tickets, etc. These are also ancillary activities, but do not fall in the activity of manufacture or production. The basic ingredient of hotel-keeping is providing lodging or maintaining a building consisting of many rooms for overnight accommodation which has nothing to do with any manufacturing or producing article or thing.
The industrial undertaking as a whole has to carry on its business of producing or manufacturing articles or things. There is no scope for separation of the integrated activity of the industrial undertaking and treating any part thereof as an activity of the nature referred to in s. 32A. It is the end result of the purpose of the business which is to determine whether the undertaking is an industrial undertaking and as such qualifies for the benefit of s. 32A. Therefore, even if the incidental activity of processing food materials into edible products for service to clients in the restaurant is a necessary adjunct of the hotel business, it is the ultimate nature of the business of hotel - keeping that is determinative of the issue.
Therefore, preparation of food in a hotel does not constitute manufacture or production of any article or thing within the meaning of s. 32A of the Act and the assessee running the hotel is not entitled to investment allowance under the section."
19. Similarly, in the case of CIT vs. Berry's Hotels (P) Ltd. (supra), it was held that "manufacturing or processing of goods - "meaning of - object of s. 2(7)(c) of Finance Act, 1973, is to give concession in rate of income-tax to manufacturing concerns - concession not intended to be given to trading concerns - assessee company carrying on hotel business - activity is only a trading activity - assessee not an industrial company entitled to the concessional rate of tax - Finance Act, 1973." Assessee's counsel placed reliance on CIT vs. Hotel Belle Vue (P) Ltd. (supra) which is in favour of the assessee but in this case investment allowance is held to be allowable on kitchen equipment only.
20. After carefully considering the various case laws as relied upon by rival parties, we are of the view that the ratio of the decisions of Calcutta High Court as well as Bombay High Court are found to be fully applicable as the same are more appropriate, reasonable, rational and logical and preparation and service of food in a hotel cannot be held to be manufacturing activity for producing article or things in order to entitle the assessee to claim benefit as provided under s. 32A of the IT Act. This view of ours gets further fortified by the latest decision of the Karnataka High Court as CIT vs. Wood Lands Hotel (P) Ltd. wherein reliance was placed on earlier decision of the same High Court as CIT vs. Hotel Ayodya (1993) 201 ITR 1002 (Kar). Therefore, in our considered view, action of the AO was justified in not allowing the claim of investment allowance in each of these years and CIT(A) was not justified in granting relief to the assessee. So, while accepting the appeal of the Revenue, we reverse the order of the first appellate authority on this point and restore that of the AO. As a result, this ground in both the appeals is allowed.
21. Ground No. (b) for asst. yr. 1985-86 relates to challenge regarding direction of CIT(A) not to include a sum of Rs. 3,92,758 paid by the assessee-company as commission to travel agents for the purposes of working out the disallowance under s. 37(3A) of the IT Act, 1961. It was submitted on behalf of the Department that commission paid to travel agents was in the nature of sales promotion expenses. Thus, these were held to be includible for disallowance under s. 37(3A) of the IT Act. Assessee preferred appeal against such inclusion of commission paid for calculating disallowance under s. 37(3A) and it was pleaded before the first appellate authority that payment of commission to travel agents was an accepted norm in this trade and as such did not qualify for disallowance as made by the AO. So it was pleaded for deleting such amount for working out disallowance under s. 37(3A) of the IT Act. Reliance was placed on the decision of Tribunal, Chandigarh Bench, in the case of ITO vs. Meera & Co. (1986) 24 TTJ (Chd) 44 : (1986) 15 ITD 227 (Chd) where on similar facts it was held that commission paid to its agents for procuring orders, ensuring payments from the customers and for providing after-sales services during warranty period could not be treated as sales promotion expenses. CIT(A) deleted such addition for working out disallowance under s. 37(3A) and against such direction Revenue is in appeal and it was pleaded for restoration of the order of AO as it is for business promotion activity and AO was justified in including the same for working out disallowance to be made under the said provision.
22. The learned counsel for the assessee while relying upon the order of CIT(A) has further pleaded for confirmation of her order and reliance was placed on CIT vs. Santosh Agencies (1994) 210 ITR 78 (Cal), CIT vs. Bata India Ltd. (1993) 201 ITR 884 (Cal), CIT vs. The Statesman Ltd. (1992) 198 ITR 582 (Cal), CIT vs. Popular Automobiles (1995) 212 ITR 611 (Ker) and 204 ITR (St) 708.
23. We have heard rival submissions, perused the record, gone through the case law as cited and after considering the arguments of both sides and considering the case law as cited we are of the opinion that action of CIT(A) is fully justified and commission paid to travel agents for procuring business in view of facts and circumstances cannot be held to be expenses towards business promotion. It is a trading expense and CIT(A) was fully justified in directing for excluding such expenses in working out disallowance under s. 37(3A) of the Act. So his action being in conformity with law is confirmed and this ground of the Revenue gets dismissed.