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TMI Blog1998 (11) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1988-89. 2. The first ground that has been raised in this appeal is that the learned CIT(A) erred in sustaining the disallowance of Rs. 47,654 under r. 6B of the IT Rules. The AO made the disallowance under r. 6B of a sum of Rs. 65,704 being the cost of presentation articles. The learned CIT(A), on verification came to the conclusion that the amount in excess of Rs. 50 per article is actually R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... element of advertisement was involved in those presentation articles and that the disallowance made under r. 6B is wholly untenable. The learned Departmental Representative supported the order of the first appellate authority. 4. Rule 6B of the IT Rules deals with expenditure on advertisement. Rule 6B(1) provides that the allowance in respect of expenditure on advertisement should not inter alia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the effective and smooth conduct of the business. It is not meant for the purpose of advertising the products of the company. Hence, the disallowance made under r. 6B of the IT Rules is not sustainable. Similar view was taken by the Bombay High Court in the case of CIT vs. Allana Sons (P) Ltd. (1993) 114 CTR (Bom) 448 : (1995) 216 ITR 690 (Bom) and the Delhi High Court in the case of CIT vs. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure wholly and exclusively incurred for the purposes of business and that interest on funded interest has to be allowed as an expenditure under s. 36(1)(iii) r/w s. 37(1) of the IT Act. The learned Departmental Representative supported the order of the first appellate authority. 6. Regarding the claim of interest on funded interest, the learned CIT(A) held as follows: "Regarding the interes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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