Law:

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Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 1963-64 - Assessing Officer disallowed entire expenditure incurred on advertisements holding that same were not in nature of advertisement at all - Tribunal, however, restricted disallowance to 25 per cent of expenditure considering expenditure to have been incurred for purpose of business - Whether when expenditure was considered by appellate authorities to be incurred for purpose of business, mere fact that expenditure was also motivated by charity did not justify any disallowance - Held, yes - Whether, therefore, either expenditure was deductible - Held, yes FACTS The ITO disallowed the entire expenditure on advertisements observing that the same were not in the nature of advertisements at all. On appeal, the AAC held that the advertisements given in various souvenirs required to be treated as advertisement-cum-donation. He, therefore, allowed 50 per cent of the amount spent on advertisement as deduction. On further appeal, the Tribunal allowed the same at 75 per cent. On reference : HELD The view taken by the Tribunal could not be said to be perverse inasmuch as the names of some of the souvenirs indicated on the face of it that the advertisements therein were more with the motive of charity than that of publicity. The manner in which this item of expenditure had been dealt with by the appellate authorities did indicate that they considered the expenditure to have been incurred for the purpose of business. That being so, the mere fact that the expenditure was also motived by charity, did not justify any disallowance. Thus, the entire expenditure was deductible. Section 254 of the Income-tax Act, 1961 - Appellate Tribunal - Powers of - Assessment year 1963-64 - Whether in view of fact that there was conflict of views between decisions of this Court on issue as to whether Tribunal had jurisdiction to admit a new claim made before it for first time on basis of Tribunal's decision in assessee's own case for another assessment year, it was a fit case for referring matter to a larger Bench - Held, yes FACTS The assessee had constructed a sugar godown in the…

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