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TMI Blog1983 (12) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings initiated by the GTO under section 16(1)(a) of the Gift-tax Act. " 2.1 The facts as framed in the order of the Commissioner (Appeals) are reproduced below : " This appeal is against the order of the GTO under section 16(3) read with section 16(1)(a) of the Gift-tax Act. The facts of the case are that the assessee incurred an expenditure of Rs. 97,000 on advertisement in souvenirs issued by the various political parties. In the income-tax assessment, the ITO disallowed the expenditure treating the same to be donation. The AAC and the Tribunal partly confirmed the addition treating the same to be in the nature of donation. Since the assessee had not filed any return of gift-tax and in view of the fact that part of the expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 16(1)(a) of the Gift-tax Act, 1958 ('the 1958 Act') was in pari materia with section 147(a) of the Income-tax Act, 1961 ('the 1961 Act') and, therefore, the cases applicable under the 1961 Act were equally applicable under the 1958 Act. However, he rejected appeal of the assessee on this ground by holding in the present case that the GTO had got information from the income-tax records and, therefore, his belief that there was omission on the part of the assessee to file the return was well based and, therefore, proceedings were correctly initiated. 4. The assessee also took alternative ground that the gift was exempt under section 5(1)(xiv) of the 1958 Act. Reliance was placed on CBDT's Circular No. 200 [F. No. 204/29/76-IT(A-II) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also the receipts. He drew our attention to pages 1 to 5 of the compilation wherein it was stated that amount was in respect of cost of advertisement appeared in the souvenirs. Besides, while filing the income-tax return also in Part IV of the return, it was stated that advertisement in souvenir included advertisement in souvenir of political parties, as per page 16 of the paper book. Even this fact is not disputed by the revenue. Besides, the circular of 1976 is clarificatory in nature as could be seen from the contents of the circular and, therefore, was applicable to all pending assessments. He also drew our attention to page 14 wherein for the assessment year 1977-78 in the assessee's own case the Tribunal had allowed advertisement in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1)(a) was justifiably invoked. 8.1 We have considered the submissions and also the materials to which our attention was drawn. 8.2 We are in agreement with the Commissioner of Gift-tax (Appeals) and find that phraseology of section 37(1) of the 1961 Act is quite different. The governing principle for disallowance under the said section is altogether different from that applied to while claiming exemption under section 5(1)(xiv) which requires that gift should be made bona fide, in the course of business and for the purpose of business. In this view of the matter, the disallowance under the 1961 Act would still be entitled to exemption under this clause while interpreting even Circular No. 200 of 28-6-1976. It is also interesting to note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts given, we feel that the substantial portion of the amounts did partake of the nature of the donations. It is no doubt true that some portion thereof is also on account of advertising the goods. Therefore, having regard to all the facts of the case, we hold that one-fourth of such expenses is on account of advertisement and the rest is on account of donations paid to the political parties. On this basis, the amount which can be allowed as advertisement expenses comes to Rs. 24,250. The disallowance made by the ITO is, accordingly, reduced by Rs. 24,250. " Therefore, such finding was only on the basis of facts given. In the assessee's own case in subsequent year for the assessment year 1977-78, the Tribunal allowed full deduction of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstinct. Both these possibilities are extinct in types of donations under consideration. After all businessmen will not spend moneys for a song. Consideration, either in praesenti or expected, is always there. Therefore, such donations are always with strings. If need be, donors would not hesitate in twisting arms of recipients. Motive can also be attributed to said gift in case the recipient parties come in power. Who can afford to invite the wrath of executives in administration in this mixed economy, such as ours, with controls necessitating sanctions and permissions ? For the sake of personal saintly philosophy of those in management, the company's interest cannot be exposed to vagaries of political torpedos. Therefore, such types of do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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