CBDT circular 16 July 1976
Circular No. 203
Section 37(3) l Expenditure on Advertisement/ Maintenance of Guest House/travelling
What this is
Circular No. 203 was issued by the Central Board of Direct Taxes on 16 July 1976. Its subject is Section 37(3) l Expenditure on Advertisement/ Maintenance of Guest House/travelling.
This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.
What it does
Follows up Circular No. 200 dated 28th June 1976, which had said that no distinction need be drawn between advertising in souvenirs and any other advertising, and answers whether an assessee may advertise in more than one souvenir brought out by the same institution. The Board says souvenirs are a recognised medium of publicity, and just as a businessman may advertise in more than one newspaper or magazine and in more than one issue of the same one, expenditure on advertisements in more than one souvenir of the same organisation is deductible, subject to section 37(3) read with rule 6B.
Why it was issued
A question was raised whether publicity could be taken in more than one souvenir published by the same institution or organisation.
Who it reaches
- Businesses advertising in souvenirs of associations and institutions
- Organisations soliciting souvenir advertisements
- Assessing Officers disallowing souvenir advertising as not genuine publicity
- Tax auditors reporting 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 |
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. Reference is invited to Board’s Circular No. 200, dated 28-6-1976 [Clarification 2] by which it was clarified that no distinction need be drawn between expenditure on advertisements in souvenirs and other types of advertisement.
2. A question has been raised as to whether an assessee can resort to publicity in more than one souvenir published by the same institution/organisation. Souvenirs are one of the recognised media of publicity. A businessman can advertise in more than one newspaper or magazine and also in more than one issue of the same newspaper or magazine. Expenditure on such advertisements will qualify for deduction under section 37(3) read with rule 6B of the Income-tax Rules. Similarly, if advertisements have been released in more than one souvenir published by the same organisation, deduction in respect of such publicity will be admissible provided aforesaid conditions are satisfied.
Circular : No. 203 [F. No. 204/29/76-IT(A-II)], dated 16-7-1976.
What to watch
- The allowance is expressly subject to section 37(3) and rule 6B, so the ceilings and conditions there still apply.
- It answers only the multiplicity point; it does not certify that any particular souvenir advertisement was for business purposes.
- Section 37(3) and rule 6B, which capped advertisement expenditure, have since been dropped, so the restriction the circular refers to belongs to its own period.
- It builds on Circular No. 200 dated 28th June 1976, which is where the basic equivalence with other advertising comes from.
Where you meet it
In an assessment disallowing advertisement expenditure in a charitable or association souvenir, and in a tax audit report on advertisement spend.
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
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.