Disallowance of expenditure on advertisements in souvenirs. - Income Tax - 9/20/69-ITA-2

Circular Number: 9/20/69-ITA-2 File Number: 9/20/69-ITA Dated 13/06/1969 Subject : Disallowance of expenditure on advertisements in souvenirs. It has been represented to the Board that expenditure incurred by business on advertisements in souvenirs by trade, commerce and industry should be allowed in full in the same manner as expenditure on advertisements in newspapers since the purpose of both kinds of advertisements is identical. 2. The matter has been examined. The position, in law, is that expenditure on advertisements in souvenirs by trade, commerce and industry will be admissible in full if it can be said to have been laid out wholly and exclusively for purposes of business. Rule 6B of the Income-tax Rules which lays down the extent and the conditions subject to which expenditure on advertisement is to be allowed under section 37(3) of the Income-tax Act, does not bar the allowance of expenditure on advertisements in souvenirs, etc., in full. It is only where donations are given in the garb of advertisement expenses that the expenditure is inadmissible. Even in such cases, the donations should be considered for relief under section 80G of the Income-tax Act if the conditions mentioned in that section are fulfilled.