SECTION 37(3) – EXPENDITURE ON ADVERTISEMENT/
MAINTENANCE OF GUEST HOUSE/TRAVELLING

Expenditure on advertisement in souvenirs – Allowance thereof as admissible deduction

1. It has been represented to the Board that expenditure incurred by businessmen on advertisements in souvenirs by trade, commerce and industry should be allowed in full in the same manner as expenditure on advertisements in newspapers since the purpose of both kinds of advertisements is identical.

2. The matter has been examined.  The position, in law, is that expenditure on advertisements in souvenirs by trade, commerce and industry will be admissible in full if it can be said to have been laid out wholly and exclusively for the purpose of business. Rule 6B of the Income-tax Rules, which lays down the extent and the conditions subject to which expenditure on advertisement is to be allowed under section 37(3), does not bar the allowance of expenditure on advertisements in souvenirs, etc., in full. It is only where donations are given in the garb of advertisement expenses that the expenditure is inadmissible. Even in such cases, the donations should be considered for relief under section 80G, if the conditions mentioned in that section are fulfilled.

Circular : No. 19 [F. No. 9/20/69-IT(A-II)], dated 13-6-1969.

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