These appeals are directed against disallowance made under section 37(3A) of Income-tax Act, 1961 ('the Act'). 2. assessee is registered firm. In previous year ended 31-3-1979 relevant to assessment year 1979-80, assessee had incurred sum of Rs. 1,72,922 under head 'Advertisement expenses'. This included sum of R s . 3,169 representing value of two speakers supplied to mosques at Machilipatnam and Vijayawada. Under section 37(1) only expenditure wholly and exclusively laid out for purposes of business could be allowed to be deducted and expenditure of personal nature has to be disallowed. Hence, this sum of Rs. 3,169 was disallowed. balance of Rs. 1,72,753 was required to be considered for deduction. However, section 37(3) states that notwithstanding anything contained in section 37(1), any expenditure on advertisement shall be allowed only to extent and subject to such conditions, if any, that may be prescribed. Rule 6B of Income-tax Rules, 1962 ('the Rules') prescribes that allowance in respect of expenditure on advertisement shall not exceed in respect of articles intended for presentation, Rs. 50 on each such article. Out of said sum of Rs. 1,72,753 sum of Rs. 1,21,264 represented value of presentation articles. But, since those articles were not individually in excess of Rs. 50, no disallowance was made under section 37(3) read with rule 6B. Section 37(3A) was introduced by Finance Act, 1978, with effect from 1-4- 1979 and it states that notwithstanding anything contained in sub-section (1) but without prejudice to provisions of sub-section (2B) or sub-section (3), where aggregate expenditure on advertisement exceeds Rs. 40,000 such expenditure exceeding percentage of adjusted expenditure shall not be allowed as deduction. Explanation thereto defines 'adjusted expenditure' to mean aggregate expenditure incurred by assessee on advertisement, etc., as reduced by so much of such expenditure as is not allowed under sub- section (1) and as further reduced by so much of such expenditure as is not allowed under sub-section (2B) or sub-section (3) or both. We may reduce it to formula as follows: Adjusted expenditure: Aggregate expenditure minus [amount disallowed under sub-section (1) plus amount disallowed under sub-section (2B) plus amount disallowed under sub-section (3)] Translated into figures in present case, adjusted expenditure is equal to Rs. 1,72,922 minus Re. 0 (nil) [since no amount is disallowed under sub-section (1), (2B) or (3)]. Accordingly, appropriate percentage, namely, 121, per cent of this sum of Rs. 1,72,753 equivalent to Rs. 21,594 was disallowed under section 37(3A). Similarly, for assessment year 1980-81, following same process, sum of Rs. 47,000 was disallowed out of adjusted expenditure of Rs. 3,13,336. This was upheld by Commissioner (Appeals). 3. In these appeals, contention of assessee is that for assessment year 1979-80, sum of Rs. 1,21,264 which was not disallowed under section 37(3) read with rule 6B should also be excluded from adjusted expenditure so that balance of Rs. 51,489 alone could be treated as adjusted expenditure. We are unable to see how this result could be achieved in face of self-evident provision of definition of 'adjusted expenditure'. It only requires that amount disallowed under other sub-sections to be excluded from aggregate expenditure to arrive at adjusted expenditure. What was not disallowed has no place in this formula. 4. assessee then contended that since term 'aggregate expenditure' has not been defined, it must be taken to mean so much of expenditure as remaining to be considered for allowance after taking out amount which has already been allowed under any other sub-section. Reference was made to provisions of section 37(3B) which provides that nothing contained in sub-section (3A) shall apply in relation to any expenditure incurred o n advertisement in small newspaper, etc. It was submitted that on same analogy expenditure incurred on presentation of articles less than Rs. 50, which is already allowed under section 37(3), should also be excluded from purview of section 37(3A). We are unable to accept this argument also simply because sub-section (3B) is specific exclusion of certain items from scope of sub-section (3A) and we cannot add to that list. 5. It was then argued that what is allowed as deduction under one sub- section cannot again be considered for disallowance under another sub-section and, therefore, expression 'aggregate expenditure' should be given harmonious construction to mean expenditure remaining to be considered and could not mean total expenditure allowed on advertisement. This argument completely ignores scheme of provisions of section 37. Section 37 originally contained sub-section (1) providing for allowance of all expenditure laid out for purpose of business except what was either capital in nature or was personal expenditure. Parliament then introduced sub-section (2) which provided that even expenditure could be allowed under sub-section (1) subject to ceiling with respect to entertainment expenditure. Again sub-section (3) was introduced to state that expenditure incurred by assessee on advertisement or guest house or travelling would be subject to certain conditions and limits prescribed. Thereafter, sub-section (3A) was introduced to provide overall ceiling in respect of aggregate expenditure on advertisement, publicity and sales promotion. words 'aggregate expenditure' have to be understood in context of total expenditure laid out on advertisement, publicity and sales promotion and in context word 'aggregate' can only mean sum total of expenditure on these three items. It would be seen that while sub-section (1) provided for allowance of expenditure positively, other sub-sections provided negatively for disallowance of part of sum which could be allowed under sub-section (1). Such disallowances may refer to individual items of expenditure as in sub-section (2) or sub-section (3). There can also be overall ceiling prescribed such as sub-section (2A) for entertainment expenditure and sub-section (3A) for advertisement expenditure. It is only in this context to preserve operation of sections simultaneously that expression 'without prejudice to provisions of other sections' has been used. While sub-section (3) provides for individual limit in respect of presentation of articles as part of advertisement expenditure, sub-section (3A) provides for overall ceiling in respect of entire advertisement expenditure. In order to see that there is no double disallowance, overall ceiling is related to adjusted expenditure which excludes expenditure which is already disallowed. At same time, sub-section (3A) provides that fixation of ceiling under that sub- section would not prevent ITO from disallowing individual item of expenditure under sub-section (3) with respect to conditions prescribed. 6. Two illustrations would suffice to illustrate two sides of coin and demonstrate fallacy in argument of assessee. By simultaneous operation of these two sub-sections, while there would be no disallowance under sub-section (3A), if expenditure does not exceed Rs. 40,000, there would yet be disallowance under sub-section (3) if that amount of Rs. 40,000 has been spent on presentation of articles exceeding Rs. 50, thus, violating prescribed rule under rule 6B. In contrast even if entire expenditure of assessee on advertisement is within that rule and could not be disallowed under sub-section (3), yet overall ceiling under sub-section (3A) would apply if aggregate expenditure exceeds limits. Thus, assessee would not be able to get out of overall ceiling prescribed under sub-section (3A) by merely pointing out that individual items of expenditure were within limits prescribed under sub- section (3). This is exactly reason why expression 'without prejudice to provisions of sub-section (3)' has been utilised in sub-section (3A). 7. It was contended on behalf of assessee that expression 'without prejudice' should be understood to mean that rights of assessee have been preserved and that what is allowed as deduction under sub-section (3) could not be disallowed under sub-section (3A). Reference was made to paragraph 25 in memorandum explaining provisions in Finance Bill, 1978---[1978] 111 ITR (St.) 158---reproduced below: " existing provisions will continue to apply in relation to such expenditure, and percentages of disallowance specified above will operate only in relation to expenditure which remains to be allowed after application of aforesaid provisions."---[1978] 111 ITR (St.) 166 This memorandum merely reproduces scheme explained above. Under t h e definition of 'adjusted expenditure' what is disallowed will not be again considered for overall ceiling and what remains to be allowed is to be governed by provisions of sub-section (3A). This cannot mean that what has not been disallowed would escape overall ceiling prescribed in sub-section (3A). As we have noted before, sub-sections (3) and (3A) refer only to disallowances and fact that expenditure has not been disallowed under sub-section (3) cannot be treated as if it had been allowed as deduction and not liable to be governed by ceiling prescribed under sub-section (3A). expression 'without prejudice' has to be understood only in context and reading words 'without prejudice' to provisions of sub-section (3), as whole, it can only be understood as allowing play of sub-section (3) in addition to operation of sub-section (3A). In other words, expenditure in question has to be governed by both provisions and fact that it is not disallowed under one of these sections cannot mean that it would escape from operation of other sub-sections. In circumstances, we are not convinced by any of arguments of assessee and we have no hesitation in confirming order of Commissioner (Appeals). appeals are dismissed. *** A. HABEEBUR RAHMAN AND SONS v. INCOME TAX OFFICER