Law:

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Section 80-I of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertaking after a certain date - Assessment years 1990-91 and 1991-92 - Assessee was engaged in business of publishing newspapers, weeklies and other publications from four units - Income included revenue from advertisements as well - Assessee claimed deduction under section 80-I on share in income from advertisements as attributable to its new unit at Trivandrum - Whether assessee was entitled to said deduction under section 80-I - Held, yes FACTS The assessee was engaged in the business of publishing newspaper, weeklies and other publications from four units. The income of the newspaper also included the revenue from advertisements. For the assessment years 1990-91 and 1991-92, the assessee claimed a share in income from advertisements as attributable to its newly started industrial undertaking (unit) at Trivandrum and, therefore, claimed the deduction at the rate of 25 per cent under section 80-I. The Assessing Officer viewed that the benefit of the advertisement was gained solely by the advertiser and not by the paper. Hence, the deduction was not allowed. On appeal, the Commissioner (Appeals) upheld the claim of the assessee. But the Tribunal allowed the view taken by the Assessing Officer. On reference : HELD Reaching out to more readers is a material factor for an advertiser to choose any particular medium to advertise or propagate his commodity. If the paper expends large sums of money to increase its circulation, it would necessarily increase its circulation. As an offshoot by such increased circulation, a keen advertiser would choose that particular medium to reach its message to its consumers. As a corollary, the increased advertisement necessarily increases the revenue of the newspaper because the increased circulation is the sole factor for an advertiser to have chosen that particular media. Therefore, the paper has to keep an eye on keeping the circulation on the higher ebb. [Para 11] In the instant case, the assessee started an independent unit at Trivandrum. The circulation in that unit increased only because of its efforts and better news coverage it…

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