- (1.) This is a tax reference which the Revenue got referred by the Tribunal through the intervention of the High Court. Three questions have been referred to us, all for the assessment year 1988-89 and those three questions are as follows : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing a sum of Rs. 8,29,723 as revenue expenditure ? 2.Whether, the Tribunal was justified in law in allowing the claim of Rs. 36.77 lakhs under Section 32AB and Rs. 1,28,960 under Section 80HHC of the Income-tax Act, 1961 ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of Rs, 35.11 lakhs, made to the value of closing stock and whether the findings leading to the conclusion are otherwise unreasonable and perverse ?"
(2.) So far as the first question is concerned, the facts found by the Tribunal are that in regard to two new brand products of the assessee, viz., New Luxor and Rangoli, the assessee incurred advertisement expenditure for the accounting year in question for the aggregate sum of Rs. 8,29,723. This expenditure, needless to say, did not constitute the entirety of the advertisement expense of the assessee for the year in question, but it is only with regard to this amount that the disputes have arisen before us.
(3.) The assessee had admittedly not treated this sum as revenue expenditure in its books of account consistently. However, in the assessment proceedings, the assessee took the firm stand that this advertisement expense was wholly of a revenue nature and that they were not bound by the treatment given to these expenses in their own accounts even by their own accountants.;