TMI Blog1991 (7) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... arties agreed that this issue has been covered in favour of the assessee by the decision of the Madras High Court in the case of Srinivas Industries vs. CIT (1991) 92 CTR (Mad) 17 : (1991) 188 ITR 22 (Mad). Accordingly, this ground is dismissed. Ground NO. 3 is to the effect that the Commissioner(A) erred in holding that the expenditure incurred on advertisement for recruitment of staff, advertisement for inviting fixed deposits, advertisement for company matters and art work for annual report should not be taken into consideration while computing the disallowance under s. 37(3A) of the IT Act, 1961 and that he failed to appreciate that there is no specific exclusion of the above types of expenditure incurred on advertisements as was prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sales promotion. Similarly, he held that the advertisements charges incurred for publishing notices in connection with the Annual General Body meeting also did not come within the purview of s. 37(3A) and the expenditure of Rs. 1,750 incurred for art work on the cover pages of the annual report of the company cannot be considered as in the nature of the advertisements, publicity and sales promotion. Accordingly, he directed the ITO to exclude the total sum of 36,180 in working out the amount disallowable under s. 37(3A). The Revenue aggrieved over this. 6. The departmental representative urged that sub-s. (3B) of s. 37 was inserted by the Finance Act, 1978 w.e.f. 1st April, 1979 and was deleted by the finance (No. 2 Act, 1980 from 1s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purposes of calculating the disallowances under s. 37(3A). The assessee claimed that the following advertisements expenses should not be considered for the purposes of disallowance under s. 37(3A). 1. For Recruitment of staff Rs. 13,040 2. Fixed Deposit Advertisement Rs. 16,479 3. Company Notices Rs. 4,911 4. Art work in 12th Annual Report Rs. 1,750 . . Rs. 36,180 This expenditure is not in the nature of 'advertisement', publicity and sales promotion. One has to advertise for recruiting employees. This is not in the nature of advertisements or publicity expenses. This is only a public announcement seeking applications from el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blicity and sales promotion at the cost of the exchequer". It was mentioned in the said circular that the intention of the legislature is inserting the said sub-s. (3A) was "to restrict the colossal expenditure by the tax payers on advertisements, publicity and sales promotion". Sub-ss. (3A) and (3B) were in force for the asst. yr. 1979-80 and 1980-81 only. It is true that in those two asst. yr. namely 1979-80 and 1980-81, the exclusion for the purview of sub-s. (3A) was provided for advertisements in any newspaper for recruitment of personnel and advertisements for the publication in any newspaper of any notice required to be published under any law. Sub-ss. (3A) and (3B) of s. 37 were deleted from 1st April, 1981 by Finance (No. 2) Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advertisements, publicity and sales promotion are to be excluded for the purposes of computing the disallowance to be made under s. 37(3A). In this case it is to be seen whether the expenditure on advertisements, under consideration, is incurred voluntarily or involuntarily by the assessee. If the expenditure on advertisements is for advertising the assessee's products/services or publishing its products/services or promoting the sales of its product/services, it would definitely come within the ambit of the words advertisement, publicity and sales promotion in the said sub-s. (3A). The advertisements inviting deposits from the public are enjoined to be published in one English newspaper and one vernacular newspaper by s. 58A of the Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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