9911796707
TMI Blog1994 (10) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and distribution of samples etc., namely (i) that the expenditure itself was not an expenditure on advertisement, publicity or sales promotion; (ii) no disallowance could be made legally under section 37(3A). The Tribunal decided the first contention of the assessee but the other contention of the assessee left undecided. On the Misc. Application filed by the assessee, the Tribunal has recalled the matter to consider the alternative contention of the assessee vide its order dated 20th July, 1993. 3. The parties have been heard on this issue. The contention of the appellant is that no disallowance can be made under sub-section (3A) of section 37 in respect of expenditure on advertisement, inasmuch as, sub-section (3A) is non obstante cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slature with effect from 1-4-1986. The relevant extract of the decision has reproduced as under: "We have carefully considered the rival submissions of the parties, as well as the provisions of section 37 with particular reference to the expenditure incurred on advertisement, which has been amended from time to time and we find force in the stand taken on behalf of the assessee. It is pertinent to note that sub-sections (3A) to (3D) of the Act have been omitted from 1-4-1986 by the Finance Act, 1985, which would lend support to the stand taken on behalf of the assessee that in deciding the allowance of the expenditure incurred on advertisement one has to see the provisions of sub-section (3) of section 37 of the Act, which is still on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer the view taken by the Tribunal in the case of Teksons (P.) Ltd. The provisions of section 37(3) is also non obstante clause with reference to section 37(1) which itself shows that the expenditure on advertisement is allowable under section 37(1). The income from business or profession is to be computed under section 28 in accordance with the provisions contained in sections 30 to 43(B). Sections 30 to 36 provide for certain allowances with reference to specific expenditure mentioned in those sections. Section 37(1) is a residuary section which allows all other expenditures which are of revenue in nature. The expenditure on advertisement is allowable under section 37(1) since it is not covered by any of the earlier sections, i.e., 30 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Finance Minister dated 28th February, 1983. The relevant portion which is reproduced as under : "Hon'ble Members must be aware of lavish and wasteful expenditure by trade and industry, particularly on travelling, advertisement and the like. With a view to inculcating a climate of austerity and providing a disincentive to unproductive, avoidable and ostentatious spending by trade and industry I propose to provide that 20 per cent of such expenditure will be disallowed in computing the taxable profits. The Income-tax Act provides for the disallowance of entertainment expenses beyond a ceiling and for total disallowance of expenses on maintenance of guest houses. I propose to define the terms 'entertainment expenditure' and 'guest house ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of running and maintenance of Motor Cars which is not the subject-matter mentioned in sub-section (3). Had these sub-sections being superfluous with reference to subject-matter mentioned in sub-section (3) the legislatural would not have omitted all the sub-sections in entirety. There was no need to omit the provisions of sub-section (3B) with reference to expenditure on Motor Cars. There may be various other reasons with the Legislature to omit these provisions. But the omission of these sub-sections do not, to our opinion, lead to the inference that these sub-sections were omitted being not required on the statute. 8. In view of the above discussions, we prefer the view taken by the Tribunal in Teksons (P.) Ltd.'s case for the reasons m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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