ORDER
T.N.C. Rangarajan, Judicial Member
1. This appeal by the assessee is directed against the disallowance of Rs. 16,35,150 and Rs. 45,015 Under Section 37(3A).
2. The first amount represents the conveyance allowance paid to the employees of the assessee in respect of two-wheelers. The assessee claimed that this amount cannot be treated as expenditure incurred for running and maintenance of motorcar specified in Sub-section (3B) for being disallowed under Sub-section (3A) of Section 37.
3. The authorities below rejected this claim. The assessee reiterates the claim before us and contends that the motor-car in Section 37(3B) cannot be extended to two-wheelers. The Revenue supported the orders of the authorities below.
4. In the budget speech of the Finance Minister for 1983-84 it was stated-[1983] 140 ITR (St.) 31:
Hon’ble Members must be aware of lavish and wasteful expenditure by trade and industry, particularly on travelling, advertisement and the like. With a view to inculcating a climate of austerity and providing a disincentive to unproductive, avoidable and ostentatious spending by trade and industry, I propose to provide that 20 per cent of such expenditure will be disallowed in computing the taxable profits.
This was the purpose for which this amendment was made. It is obvious that the expression motor-car which is used in conjunction with the maintenance of aircraft is to cover transport of an expensive kind and could not be extended to two-wheelers, which are economical, even by any implication. We are therefore satisfied that on a plain reading of the section as well as on a purposive approach to the problem (see CIT v. K.S. Vaidyanathan [1985] 153 ITR 11/23 Taxman 169 (Mad.) (FB)) the expenditure of running and maintenance of two-wheelers cannot be included within the scope of Sub-section (3B) of Section 37. We therefore delete this disallowance.
5. The other item relates to expenditure incurred for advertisement for recruitment of personnel. Here again the item in Sub-section (3B) of Section 37 is “advertisement, publicity and sales promotion”. Reading this ejusdem generis it can refer only to advertisement connected with the sale of services and goods and not recruitment of personnel. It was pointed out on behalf of the Revenue that when there was a similar expression in Sub-section (3A) as introduced by the Fin. Act ’78 and later omitted by Fin. Act 2 of 1980 it was specifically mentioned in Sub-section (3B) introduced by the same Act that “advertisement in newspapers for recruitment of any personnel” will not be included within the scope of advertisement and in the absence of such an exclusion it should be taken as part of advertisement expenditure. We are unable to accept this contention as it can also indicate the opposite. The specific exclusion was made when a similar expression was brought into statute book for the first time because the expression was too wide and could have been misunderstood as to its scope. Now that the same expression is repeated in the fresh section there is no necessity to specifically exclude the expenditure on advertisement in newspaper for recruitment of personnel because Parliament must have found it unnecessary to repeat the exclusions as the term ‘advertisement expenditure’ has gained a particular meaning in the context of I.T. Act.
We therefore accept the contention of the assessee that the expenditure incurred for advertisement for recruitment of staff cannot be disallowed under this section. We delete the disallowance of this amount also. The ITO is directed to recompute the total income.
6. The appeal is allowed.
