Advertisement expenditure on souvenirs and magazines held deductible when they display the assessee's name and business particulars.

Expenditure on souvenirs and magazines carrying the assessee's name, business particulars and expressions such as "with best wishes from" or "with best compliments from" was treated as advertisement expenditure under section 37(3) of the Income-tax Act, 1961. The publication disclosed the assessee-firm's identity and business nature, and the first appellate authority had accepted the outlay as incurred for advertisement. In the absence of material to show that the page allotment was merely to flatter interested persons, the Tribunal's restrictive view was held unsustainable and the deduction was allowed.

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Issues: Whether expenditure incurred by the assessee on souvenirs and magazines carrying its name and business particulars, including expressions such as "with best wishes from" and "with best compliments from", constituted advertisement expenditure eligible for deduction under section 37(3) of the Income-tax Act, 1961.

Analysis: The assessee had produced evidence of actual expenditure, and the publications disclosed its name and the nature of its business. The expenditure was accepted by the first appellate authority as being incurred for advertisement of the assessee-firm. No material was shown to support the view that the page allotment was merely to satisfy the ego of interested persons. The restrictive construction adopted by the Tribunal was therefore unsupported.

Conclusion: The expenditure was allowable as advertisement expenditure, and the Tribunal was wrong in disallowing the claim. The question was answered in favour of the assessee.

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