Binding precedent and CBDT circulars prevented denial of tax relief and disallowance of souvenir-linked advertisement claims.

The Tribunal could not sustain allocation of donations to the agricultural section for restricting relief under section 88 because the governing Supreme Court precedent and CBDT circulars required a different treatment, so the assessee succeeded on that point. The Tribunal also could not disallow part of the head office advertisement expenditure on souvenirs by treating it as charity, because the issue was covered by the assessee's earlier decision and the expenditure treatment followed that position, so the disallowance was unjustified. The reference was answered in favour of the assessee on the two questions decided, while the remaining question was left open for fresh consideration on the limited aspect indicated.

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Issues: (i) Whether the Tribunal erred in allocating part of the donations to the agricultural section and restricting relief under section 88; (ii) Whether the Tribunal erred in disallowing part of the head office advertisement expenses through souvenirs treating them as charity.

Issue (i): Whether the Tribunal erred in allocating part of the donations to the agricultural section and restricting relief under section 88.

Analysis: The answer was governed by the Supreme Court's decision in CIT v. Maharashtra Sugar Mills Ltd. and the applicable circulars of the Central Board of Direct Taxes. On that basis, the allocation made by the Tribunal could not be sustained.

Conclusion: The issue was answered in the affirmative and in favour of the assessee.

Issue (ii): Whether the Tribunal erred in disallowing part of the head office advertisement expenses through souvenirs treating them as charity.

Analysis: The issue was covered by the assessee's own earlier decision, which governed the treatment of the expenditure in question. The Tribunal's disallowance was therefore not justified.

Conclusion: The issue was answered in the affirmative and in favour of the assessee.

Final Conclusion: The reference was answered in favour of the assessee on the two questions decided, while the remaining question was left unanswered and sent back for fresh consideration on the limited aspect indicated.

Ratio Decidendi: Where the governing precedent and binding administrative circulars support the assessee, the Tribunal cannot deny the corresponding tax relief or disallow the related expenditure contrary to that legal position.

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