Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 1965-66 - Assessee claimed deduction of expenditure incurred on inaugural function of its unit held after commencement of production at unit - Whether such expenditure was allowable as deduction as it had been incurred with a view to obtaining publicity for assessee's projects - Held, yes FACTS The assessee-company incurred an expenditure in the assessment year 1965-66 on the inaugural function of its unit. The Tribunal held that the expenditure was incurred for the purpose of the assessee's business with a view to obtaining the publicity for the assessee's projects and allowed the claim for deduction. On reference: HELD The inauguration was held after the said plants had been set up and the inauguration had nothing to do with the commencement of production in the plants. The company had a number of units in various parts of the country and it was with a view to gain publicity that the inaugural function was held. Under no circumstances could the said expenses be regarded as capital or preliminary in nature. Therefore, the expenditure was allowable as a revenue deduction. CASES REFERRED TO Delhi Cloth & General Mills Co. Ltd. v . CIT [1980] 125 ITR 96 (Delhi), Delhi Cloth & General Mills Co. Ltd. v. CIT [1985] 156 ITR 649 /[1984] 17 Taxman 194 (Delhi), Delhi Cloth & General Mills Co. Ltd. v. CIT [1986] 158 ITR 64 (Delhi), Delhi Cloth & General Mills Co. Ltd. v. Addl CIT [1986] 160 ITR 857/ 26 Taxman 281 (Delhi), ACC-Vickers Babcock Ltd. v. CIT [1976] 103 ITR 321(Bom.). Hindustan Commercial Bank Ltd.. In re [1952] 21 ITR 353 (All.). CIT v. Delhi Cloth & General Mills Co. Ltd. [1981] 127 ITR 11 /6 Taxman 53 (Delhi), CIT v. Delhi Cloth & General Mills Co. Ltd. [1978] 115 ITR 659 (Delhi) and Addl. CIT v. Delhi Cloth & General Mills Co. Ltd. [1983] 144 ITR 275/ [1982] 11 Taxman 133 (Delhi). EDITOR'S NOTE Following its decision in the assessee's own case in Delhi Cloth & General Mills Co. Ltd. v. CIT [1980] 125 ITR 96 (Delhi), the High Court held that the sum of Rs. 12,500 paid as contribution to the Indian National Congress was not an…

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