Circular No. 19

What it does

Says that expenditure on advertisement in souvenirs published by trade, commerce and industry is allowable in full if it was laid out wholly and exclusively for the purpose of business. Rule 6B, which lays down the extent and conditions on which advertisement expenditure is allowed under section 37(3), does not bar full allowance of such expenditure. The exception is where a donation is given in the garb of advertisement expenses, and even then the amount should be considered for relief under section 80G if the conditions of that section are met.

Why it was issued

It was represented to the Board that souvenir advertising serves the same purpose as newspaper advertising and should be allowed in full in the same way.

Who it reaches

Businesses advertising in souvenirs published by associations and institutions
Organisations raising funds through souvenir advertisements
Assessing Officers disallowing souvenir advertisement expenditure

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.37	s.34
s.80G	s.133, s.332, s.354

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

SECTION 37(3) l EXPENDITURE ON ADVERTISEMENT/ MAINTENANCE OF GUEST HOUSE/TRAVELLING
Expenditure on advertisement in souvenirs - Allowance thereof as admissible deduction
1. It has been represented to the Board that expenditure incurred by businessmen on advertisements in souvenirs by trade, commerce and industry should be allowed in full in the same manner as expenditure on advertisements in newspapers since the purpose of both kinds of advertisements is identical.
2. The matter has been examined. The position, in law, is that expenditure on advertisements in souvenirs by trade, commerce and industry will be admissible in full if it can be said to have been laid out wholly and exclusively for the purpose of business. Rule 6B of the Income-tax Rules, which lays down the extent and the conditions subject to which expenditure on advertisement is to be allowed under section 37(3), does not bar the allowance of expenditure on advertisements in souvenirs, etc., in full. It is only where donations are given in the garb of advertisement expenses that the expenditure is inadmissible. Even in such cases, the donations should be considered for relief under section 80G, if the conditions mentioned in that section are fulfilled.
Circular : No. 19 [F. No. 9/20/69-IT(A-II)], dated 13-6-1969.

s

What to watch

The test remains the ordinary one of expenditure laid out wholly and exclusively for business, so the commercial purpose has to be shown.
A donation dressed up as advertising is not allowable as expenditure, and the fallback is a claim under section 80G on its own conditions.
The circular construes rule 6B and section 37(3) as they then stood, and the treatment of advertisement expenditure has been altered by statute since.

Where you meet it

A disallowance of souvenir advertisement expenditure in a business assessment, treated by the officer as a disguised donation.

What it names

Rules it names. Rule 6B of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 38/2025 [F. No 370142/11/2025-TPL] / SO 1838(E) — 2 the Gazette of INDIA : Extraordinary [Part Ii—sec. 3(ii)] 23 April 2025
Circular No. 05/2012 — Inadmissibility of expenses incurred in providing freebees to Medical Practitioner by pharmaceutical and allied health s 1 August 2012
Circular No. 727 — 372. Instructions regarding extent of expenditure incurred on food or beverages provided to employees by employers to be 27 October 1995
Circular No. 708 — 372. Instructions regarding extent of expenditure incurred on food or beverages provided to employees by employers to be 18 July 1995
Circular No. 671 — 368. Whether, where deposit made by an assessee for obtaining new telephone connection under ‘Tatkal Telephone Deposit S 27 October 1993
Circular No. 644 — 371. Whether provision of food or beverages in places other than place of work in respect of low-paid employees can be t 15 March 1993

← Circular No. 21 · Circular No. 20 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.

What this is