Case Law Details
CA Sandeep Kanoi
The Respondent – assessee is engaged in the business of manufacturing and trade of biological vaccines and animal health care pharmaceutical products. The assessee sells its products either through consignment, commission agents or directly through the distributors / stockists. For the purpose of selling its products the assessee had appointed consignment agents in various territories. The stock of its products are transferred to the consignment agents who in turn sale the products under its own name to the distributors / dealers / stockists in their respective territories.
During the said assessment year, the assessee had introduced sales promotion scheme to boost the sale viz. ‘Product discount scheme’ and ‘Product campaign.’ The said schemes as described by the assessee are as under:-
1. Product Discount Scheme:– The product discount scheme (PDS) is a part of the product pricing strategy of the company. The PDS is circulated in advance in the market on monthly basis. Discounts are offered on the basis of value of the purchases by the distributors/ stockists, who are the customers for the company. (e.g. If a customer buys 10 quantity, he gets 2% discount vis a vis if he buys 100 quantity, he gets discount of 10%.) The PDS is account for as a net of sales in the books of intervet. The PDS is based on the sales quantum. It is common for all the distributors / stockists and no agreement in this regard has been entered into between Intervet and the distributors / stockists.
2. Product Campaign:- The product campaign is also a part of product pricing strategy of the company. The product campaign discount is seasonal for the promotion of specific product. The product campaign discount is for a specific period ( say for 3 to 6 months). The product campaign discounts are offered on the basis of the quantum of the sales during the campaign period. The product campaign credit notes are accounted for through value credit notes. Some times gifts e.g. Trophy, Shirt and Towel, are given to the distributors / stockists as a part of product campaign scheme. The objection of the product campaign is “ to promote the product sale and viability in competitor’s market.
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