High Court Of Punjab & Haryana
Oriental Science Apparatus Workshops vs. CIT
Sections 35B, 37(3)
Jawahar Lal Gupta & N.K. Sud, JJ.
IT Ref. No. 75 of 1987
10th January, 2002
Counsel Appeared
I.K. Mehta with Mrs. Ranjit Mehta, M.S. Kohli & R.K. Dogra, for the Applicant : R.P. Sawhney with
N.G. Sharma, for the Respondent
JUDGMENT
JAWAHAR LAL GUPTA, J. :
The Tribunal has referred the following three questions for the opinion of this Court :
Whether, on the facts and circumstances of the case, the Tribunal was right in law in having disallowed the assessee’s claim of weighted deduction under s. 35B(1)(b)(viii) on the expenditure incurred by it on air, sea and railway freight, etc. by relying on the decision of the Special Bench in the case of M/s J. Hem Chand & Co. vs. ITO (1982) 1 SOT 150 without independently applying its mind?
Whether, in view of the provisions of sub-cl. (vii) of s. 35B(1)(b), the Tribunal was right in law in having disallowed a sum of Rs. 5,000 as also the weighted deduction on it out of the expenses incurred by the partners for travelling outside India to promote the exports ?
Whether, on the facts and circumstances of the case, the Tribunal was right in law in having restricted the meaning of the word “advertisement” as appearing in s. 37(3) by holding that the souvenirs mentioning “with best wishes from” or, with best compliments from” the “assessee” did not contain advertisement by the assessee ?
Mr. I.K. Mehta, learned counsel for the assessee at whose instance the above questions have been referred for the opinion of this Court does not press question Nos. 1 and 2. Resultantly; these questions are answered against the assessee.
So far as question No. 3 is concerned, it has been alleged by the counsel that the publications in the souvenir with the remarks “with best wishes from” or “with best compliments from” the “assessee” amounted to an expense on advertisement and the expense has been wrongly disallowed by the Tribunal : Admittedly, the CIT(A) had found that the advertisements were given by the assessee for souvenirs and magazines. The supporting evidence to show the actual expenditure had been produced. The name of the appellant and the nature of business was duly published in the souvenirs. Thus, the deduction of Rs. 14,402 as claimed by the assessee was allowed. The order passed by the assessing authority was reversed. On appeal by the Revenue the Tribunal took the view that “the allotment of pages are apparently to satisfy ego of certain persons who are interested in the assessee-concern as partners or relation of partners. The expenditure, therefore, does not come under the definition of advertisement expenses and, therefore, cannot be allowed.”
After hearing counsel for the parties, we are satisfied that the claim as made by the assessee was tenable. The expenses was for advertisement of the assessee-firm. It was rightly allowed by the CIT(A). The Tribunal was wrong in taking the view that the allotment of pages was only to satisfy the ego of certain persons. No such material has been pointed out by the learned counsel for the Revenue.
In view of the above, the 3rd question is answered in favour of the assessee. In other respects, the order of the Tribunal is affirmed. No costs.
[Citation : 254 ITR 271]