TMI Blog1980 (9) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure ? " The assessee in this case is a co-operative society engaged in the business of dealing in sugar, kerosene, steel, etc., distributing the same to its members, both individuals and societies. The assessment year under consideration is the assessment year 1970-71, the relevant accounting period being the year ending June 30,1969. The assessee celebrated silver jubilee on completing twenty-five years of its existence and on this occasion it sent certain employees to Bombay for the purpose of purchase of wall-clocks for presentation to other co-operative societies who were members of the assessee. The assessee also purchased certain household stainless steel utensils which were distributed to the members of the society. The break ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be regarded as advertisement expenses as contended for by the revenue, because there was no question of advertising its products or publicising the same amongst the member-societies who were already having business transactions with the assessee. The Tribunal, therefore, held that the expenditure could not be said to be governed by any limitation prescribed under s. 37(3) or by any rules framed in connection with advertisement expenditure. The Tribunal also rejected the contention urged on behalf of the department that the expenses were disproportionate since the Tribunal found that the factum of the expenditure was not in dispute and it was not the department's contention nor was there any material to show that the expenditure was incurre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce it was for the purpose of generating goodwill that this amount was spent. It is, therefore, clear that, as in S. L. M. Maneklal Industries' case [1977] 107 ITR 133 (Guj), such items of expenditure which project the good image of the assessee society amongst its members and keeps the members satisfied and the relations with the members working smoothly, are part of the business expenditure of the assessee-society. In Amarjothi Pictures v. CIT [1968] 69 ITR 755 (Mad), a similar expenditure incurred by the assessee in that case on the occasion of the silver jubilee week of the exhibition of a particular picture of which the assessee was acting as distributor and exhibitor, was allowed as a deduction as business expenditure under s. 10(2)(xv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount was spent for advertisement that the restrictions placed by rule 6B of the I.T. Rules which deals with restrictions on presentation articles which can be presented by way of advertisement, would come into play. Since we have come to the conclusion that this amount was spent for the purpose of generating goodwill and inducing the members to continue to maintain good relations with the society, it cannot be said that the amounts were spent by way of advertisement. The society was not distributing these articles to all its customers, members as well as non-members, but it was distributing its presents in the shape of stainless steel utensils, etc., only to its members. Under these circumstances, it must be held that the amounts spent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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