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2013 (5) TMI 415 - HC - Income TaxExpenditure incurred on the maintenance of any office for the purposes of advertisement, publicity, sales promotion - whether will fall within the meaning of section 37(3B)(iv)? - Held that:- The assessee company instead of maintaining the office for the purposes of advertisement, publicity and sale promotion itself had agreed to such activity being done on its behalf by the Calcutta Company. It seems that 8% of the sale realization was agreed to be paid to the Calcutta Company at Calcutta in view of it maintaining office and infrastructure for advertising the product of the assessee company. It is a tool employed by the assessee company to have the advantage of using infrastructure maintained by Calcutta Company for advertising its own goods without taking upon itself the burden to bear the entire expenditure in case separate office in this regard is maintained by itself. This according to the assessee has resulted in curbing the actual expenditure which might have been much more in case a separate office, staff etc. is maintained by itself. Thus, dis-allowance of expenditure and thereby compelling the assessee to maintain such infrastructure itself will only result in wasteful expenditure which is sought to be curbed by inserting sub section (3A) and (3B) by the Finance Act, 1978. Sub section (3B) does not mention that the office for purposes of advertisement, publicity and sale promotion should be maintained by the assessee itself. On the contrary the use of the word "any office" in clause (iv) of sub section (3B) of section 37, without it being circumscribed by words like 'itself' or 'of it's own' leads to irresistible conclusion that expenditure can be made by the assessee company itself or by employing some person or agency on its behalf and in both cases, such expenditure qualifies for total exemption without any dis-allowance under clause (iii) of sub section (3A) of section 37 of the Act. In favour of assessee.
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