TaxTMI 
TaxTMI 
2010 (4) TMI 298
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....he Tribunal) in ITA No. 96/Chandi/95 in respect of the assessment year 1989-90. While admitting the appeal, a Division Bench of this Court has framed the following question of law: "Whether on the facts and circumstances of the case the Tribunal was right in holding that the expenditure incurred by the assessee on presentation of articles which did not contain the logo of the assessee was not meant for advertisement but for business promotion in general and, therefore, not disallowable under Rule 6-B of the Income Tax Rules?" In order to adjudicate on the aforesaid question, it may first be necessary to notice few facts. The assessment in respect of assessment year 1989-90 was completed under Section 143(3) and the following additions....
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....ribed on all the items. However, it is, difficult to find out exactly as to what was the value of items on which the company's name or logo was inscribed can be held for advertisement, publicity or sale promotion. Items having neither logo nor the name of the company are purely presentation articles without any publicity value besides there are articles having more than Rs. 50/- per item which is inadmissible under rule 6B even if the same has got some publicity value. Considered all these facts and in view of the facts mentioned above 50% of the expenses are disallowed under Rule 6-B and also on the ground that the same were not for business purposes fully and exclusively. The disallowance is in addition to the disallowance offered by t....
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....1304 of 1988. Reliance was also placed on the decision dated 26.04.1993 rendered in I.T.A. No. 638 of 1988 in the case of H.P. Agro Corporation Ltd. (supra). Accordingly, the Tribunal held in favour of the assessing opining that the expenditure incurred on presentation of articles which did not contain logo of the assessee was allowable and was not required to be meant for advertisement. The purpose of presenting those gifts was business promotion in general. The Tribunal held that CIT(A) was absolutely justified in allowing those expenses, holding that Rule 6-B was not attracted. We have heard learned counsel for the parties and have perused the paper book with their able assistance, in order to determine the issue, it would first be ne....
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....s, a publicity or advertising agent, where the assessee, or in a case where the assessee is a company, firm, an association of persons or a Hindu undivided family, any director, partner or member, as the case may be, of such company, firm, association or family, or any relative of such assessee or such director, partner or member, has a substantial interest in the business or profession of that person. (3) Any expenditure on advertisement for which payment has been made in a sum exceeding [Rs. 10,000] shall not be allowed as a deduction in computing the total income unless such payment is made by a crossed cheque drawn on a bank or by a crossed bank draft; Provided that where an allowance has been made in the assessment for any year i....
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....ictly applies to the expenditure incurred on advertisement. Rule 6-B (1) envisages permissible allowance in respect of advertisement and then it goes on specifying those item. It is obvious from the plain reading of the Rule 6B (1) (a) that allowance in respect of expenditure on advertisement must not exceed the pecuniary limit specified. In such a case the element of advertisement would enter consideration and it can be legitimately claim in such a case that 'articles intended for presentation' must have some logo of the assessee company. It is only then that requirement of expression advertisement would deem to be fulfilled. The aforesaid construction is the natural consequence of reading Rule 6B (1), which uses the expression 'advertisem....