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TMI Blog2016 (10) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... st assessee. Invoking the provisions of Sec.37(3A) r.w.s. 37(3B) in respect of the expenditure on account of advertisement, particularly in view of the fact that the said expenditure was never claimed by way of deduction - Held that:- Gujarat High Court in Vadilal Industries Ltd. (2008 (4) TMI 765 - GUJARAT HIGH COURT) has held that only the net amount of expenditure on advertisement / sales promotion i.e. gross expenditure less amount recovered by the applicant / assessee from its dealer can be considered for disallowance under Section 37(3A) of the Act. It also observed that where no claim for expenditure under Section 37 of the Act is made then no disallowance under sub-Section (3A) of Section 37 of the Act can be made. The question a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal was justified in invoking the provisions of Sec.37(3A) r.w.s. 37(3B) in respect of the expenditure of ₹ 22,68,796/( ₹ 37,55,543/for A.Y. 1985-86), on account of advertisement, particularly in view of the fact that the said expenditure was never claimed by way of deduction and the said expenditure incurred by the assessee for and on behalf of the Consignment Agent was subjected to disallowance under the provisions of Sec.37(3A) r.w.s. 37(3B) in the hands of the Consignment Agents? (iii) Whether in the facts and circumstances of the case and in law, the Tribunal was justified in disallowing the deduction u/s 80I of the Act on the interest income of ₹ 51,03,976/on the ground that the said interest income d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is incurred would be recoverable from the distributors. (c) For the assessment year 198485, the applicant assessee expended a sum of ₹ 22.68 lakhs on advertisement / sales promotion. However, in terms of the agreement with the distributors, the applicant assessee collected an amount of ₹ 27.93 lakhs from its distributors on account of sales promotion / advertisement expenses, leaving a surplus of ₹ 5.34 lakhs. It is the appellant's case that this surplus alone has to be added to the income of the assessee as income from other sources. In the aforesaid facts, the applicant assessee had not claimed the amount of ₹ 22.68 lakhs as its expenditure. (d) As against this, the Revenue contended that in view of Subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervations of the Gujarat High Court in Vadilal Industries Ltd (supra) are as under : 12. Therefore, the first thing is to determine what is the expenditure claimed by the assessee; is it the gross amount debited to the Advertisement and sales promotion account , or is it the net amount after considering the credit to the Advertisement and sales promotion account . To determine the same, the pronouncement of the Apex Court as to the meaning of the term expenditure in the case of Indian Molasses Co. (P) Ltd. (supra) may be usefully reproduced. It is stated that : Expenditure is equal to expense and expense is money laid out by calculation and intention though in many uses of the word this element may not be present, as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act as being allowable and the same falls within any of the specified categories of S.37(3B) of the Act, can be question of partial disallowance under S.37(3A) of the Act arise. (emphasis supplied) (h) There is some merit in the submission made by Mr. Patil. However, we are not considering the alternative submission as the question as framed for our opinion itself states that the expenditure was never claimed as a deduction i.e. under Section 37 of the Act. Therefore, the occasion to apply subSection (3A) of Section 37 of the Act to disallow only part thereof will not arise. (i) We are in respectful agreement with underlined observations in Vadilal Industries Ltd. (supra). In fact, Section 37(1) of the Act is a general ..... X X X X Extracts X X X X X X X X Extracts X X X X
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