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TMI Blog1990 (11) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act, 1961. 2. The Income-tax Officer, while making disallowance under section 37(3A) took into account the following expenses :---- " (i) Samples Rs. 3,115 (ii) Advertisement Rs. 34,217 (iii) Free samples Rs. 6,414 (iv) Car expenses Rs. 29,051 (v) Commission Rs. 14,610 (vi) Export promotion expenses Rs. 57,030 (vii) Business promotion expenses Rs. 2,247 -------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 3,115 in respect of free samples given to foreigners, Rs. 544 on advertisement in New York and Rs. 57,013 in regard to advertisement, publicity and sales promotion outside India could not be considered for disallowance under sub-section (3A) of section 37 in view of the provisions of sub-section (3C) of section 37. This contention was rejected by the CIT (Appeals) with regard to the amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serted by the Finance Act, 1983, w.e.f. 1-4-1984, states as under :--- " (3C) ---- Nothing contained in sub-section (3A) shall apply in respect of expenditure incurred by an assessee, being a domestic company as defined in clause (2) of section 80-B, or a person (other than a company) who is resident in India in respect of expenditure incurred wholly and exclusively on--- (i) advertisement, pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion provided under sub-section (3C) applies to the case of the assessee in relating to the assessment year 1984-85. A plain reading of sub-section (3C) goes to show that the exception provided therein would apply to an expenditure which has been incurred on advertisement, publicity and sales promotion outside India. The words "Outside India" qualify the words advertisement, publicity and sales pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 115 has been incurred in respect of advertisement, publicity and sales promotion outside India. So, even if the expenditure has been incurred in India, by virtue of clause (i) of sub-section (3C), this expenditure would have to be excluded from consideration for the purpose of computing disallowance under section 37(3A). Once these expenses are excluded from consideration, the total expenses falli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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