TaxTMI 
TaxTMI 
1995 (3) TMI 161
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....count of debit note raised by M/s Lakhmi Chand Matwal Chand. It is claimed that the advertisement was done on behalf of the assessee. M/s Lakhmi Chand Matwal Chand is close concern of the assessee. There was an agreement between Bombay Dyeing Manufacturing Co. Ltd. with M/s Lakhmi Chand Matwal Chand to incur expenditure for advertisement. No evidence has been produced if any advertisement was undertaken on behalf of the assessee, i.e., M/s Arbindo Textiles. There was no agreement with M/s Arbindo Textiles by M/s Bombay Dyeing Mfg. Co. whereunder the liability of the assessee to incur expenditure at Rs. 25,438 can be said. The assessee no doubt purchases its goods from M/s Lakhmi Chand Matwal Chand but the benefit of advertisement cannot be said to have accrued to the assessee directly, it was remotely connected. Since advertisement was not done in the name of the assessee firm, the claim of expenditure just by debit note dt.31st March, 1988cannot be said as a genuine expenditure to be covered under s. 37 of the Act. The same is thus not allowed." He also made additions of Rs. 4,705 and Rs. 3,360 being 1/4th of depreciation on motor car and 1/4th on motor car expenses "as in the ....
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.... appellant to the effect that no such disallowance had been made in earlier years, to my mind does not clinch the issue against the Department. In the earlier years the issue of admissibility of the expenditure in question has not been considered and examined by the Assessing Officer. In any case, in the immediately preceding asst. yr. 1986-87 no such expenditure has been claimed by the appellant. In the circumstances and keeping in view the aforesaid discussions I hereby uphold the disallowance of Rs. 25,438. Ground No. 1 is, therefore, dismissed." He also upheld the disallowance under the heads "depreciation on car and car expenses" by observing as under: "6. Ground No. 3 is against the disallowance of 1/4th of the car expenses for personal use of the car by the partners. The disallowance appears to be fair and reasonable and is hereby upheld. 7. Ground No. 4 is against the disallowance of 1/4th of car depreciation. Car expenses used for personal use by the partners and the disallowance of car expenses to the extent of 1/4th has already been upheld by me above. I hereby uphold the disallowance of 1/4th of the car depreciation." Dissatisfied with the order of the CIT(A....
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....wo sub-agents. So they in turn charge 0.4% towards advertisement on purchases made by these two sub-agents. All the advertisement is made under the control and guidance of the Mills in the name of Bombay Dyeing Mills because the publicity launched is for the sale of Bombay Dyeing Mills goods only. So, no publicity is done in the name of the agent or the sub-agents. Since the benefit of sale is shared by the agent and the sub-agents they also share the publicity expenses irrespective of the fact that no publicity is done in their own name either by them or by the Mills. This practice is being followed year after year and the expenditure has always been allowed in the past as having been incurred wholly and exclusively for the purposes of the business. The debit note issued by the LCMC dt.31st March, 1988for Rs. 25,438 can be seen at page 11 of the paper book. Debit notes for the earlier years can be seen at pages 8 to 10 of the paper book. In the asst. yr. 1990-91 there was no disallowance in the advertisement expenses as can be seen from the copy of the assessment order dt.27th March, 1991passed under s. 143(3) given at pages 21 to 23 of the paper book. Explanation dt.22nd Feb., 19....
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....o the said letter there existed an arrangement between Bombay Dyeing Mills and LCMC as per which the sole agent (LCMC) was entitled to get back the advertisement expenses @ 0.04% of the total purchases made by the sub-agent (the assessee). For the assessment year under consideration, the assessee has not produced before the lower authorities or even the Tribunal any such letter from the Bombay Dyeing Mills. Thus, the order of the CIT(A) dt.18th Nov., 1991for the asst. yr. 1989-90 cannot be of any assistance to the assessee. The case relied on by the assessee namely, Modi Spg. & Wvg. Mills Co. Ltd. is distinguishable. In that case, the High Court was not concerned whether the maintenance of guest house was relatable to the assessee's business or not. In the present assessee's case the advertisement expenditure is not relatable to the business of the assessee. 6. In reply, the assessee's counsel submitted as under: In the assessment year under consideration LCMC spent Rs. 2,51,402 as advertisement expenses. Deducting the amount recouped from the sub-agent of Rs. 2,18,336, it claimed for deduction only Rs. 33,066. This can be seen from the pages 3 to 7 of book No. 2 and copy of the....