Law:

Section:

Section 37(3) of the Income-tax Act, 1961 - Advertisement expenditure - Allowability of - Assessment year 1972-73 - Whether 25 per cent of expenses incurred by assessee for advertisement in souvenirs was disallowable - Held, no Section 37(4), read with section 32, of the Income-tax Act, 1961 - Guest house expenditure - Allowability of - Assessment year 1972-73 - Whether section 37(4) is non obstante vis-a-vis sub-sections (1) and (3) of section 37 only and depreciation in respect of guest house cannot be denied on basis of section 37(4) - Held, yes Section 32, read with section 37(4), of the Income-tax Act, 1961 - Depreciation - Allowance/rate of - Whether depreciation on guest house can be disallowed on basis of section 37(4) - Held, no FACTS For the assessment year 1972-73,25 per cent of the expenses incurred by the assessee for advertisement in souvenirs were disallowed and the claim of the assessee for depreciation on the guest house was disallowed under section 37(4) on the ground that it was used as a guest house. On reference: HELD The Board by its Circular No. 200, dated 28-6-1976, clarified that no distinction need be drawn between expenditure on advertisements in souvenirs and other types of advertisements. It was also clarified that the position would remain so even if the advertisements were released more than once in a year in souvenirs published by the same organisation. The circulars of the Board are binding on the income-tax authorities in view of section 119. As such the expenditure incurred by the assessee on advertisement in souvenirs could not be disallowed As regards the disallowance of depreciation, in CIT v. Chase Bright Steel Ltd. (No. 1) [1989] 177 ITR 124 / 42 Taxman 142 ( Bom.) it was held that sub-section (4) of section 37 no doubt was a non obstante clause but it was non obstante vis-a-vis sub-section (1 ) and sub-section ( 3) of section 37 only. That being so, if the expenditure or allowance was allowable under other sections of the Act, the allowance could not be withdrawn or denied to the assessee because of the prohibitory provisions in section 37( 4). Therefore, the assessee was entitled to depreciation in respect of the…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492