K.S. VISWANATHAN, A.M. We find it convenient to dispose of both these appeals together. main issue is whether part of expenditure incurred by assessee for sales promotion could be considered as advertisement expenditure and disallowed under s. 37(3A). assessee is firm having business in textiles. They had incurred expenditure of Rs. 55,796 for asst. yr. 1979-80 in respect of advertisements etc. ITO, invoking provisions of s. 37(3A), disallowed 15 per cent thereof, i.e., Rs. 8,370. Before CIT(A), assessee had contended that out of Rs. 55,796 amount of Rs. 17,620 cannot be considered as advertisement expenditure and, thereof, that should be taken out of ambit of s. 37(3A). If this was taken out, it will reduce expenditure under this head to Rs. 38,177 which is below limit of Rs. 40,000. CIT(A) did not accept assessee's submission. He was of opinion that expenditure amounting to Rs. 17,620 was also advertisement expenditure. For asst. yr. 1980-81 total expenditure was Rs. 1,39,530 and I T O disallowed under s. 37(3A) Rs. 20,929. Here also argument of assessee was that some of expenditure could not be considered as advertisements. This claim was also rejected by CIT(A). assessee is on further appeal before us. expenditure for year 1979-80 is given below: Painting of name board Rs. 7,554 Calendars Rs. 5,738 Rs. 13,292 Data Pads Rs. 821 Weekly Advertisements Rs. 500 Souvenirs Rs. 3,007 Rs. 17,620 We are unable to accept assessee's submission that there is no element of advertisement in all of them. We will, however, accept that in painting name-board there is no advertisement involved. business like that of assessee must have name-board even if it has no advertisement value. rest of expenses are clearly for information of customers about goods available with assessee. Regarding souvenirs there are decisions to point that they represent business expenditure under head 'advertisements' and are not considered as donation. Therefore, barring Rs. 7,554 rest of amount could be considered as advertisement expenditure to be processed under s. 37(3A). With regard to asst. yr. 1980-81, however, there are certain items which have to be excluded from purview of s. 37(3A). One of them is painting amounting to Rs. 13,933. Further, expenditure of Rs. 28,305 has also to be excluded since that represents packing materials. goods purchased from assessee have to be properly wrapped and if name of assessee is printed on these wraps it could not be considered purely as advertisement expenditure. Primarily they are for packing of goods. So this amount has also to be excluded. rest of expenditure are properly treated advertisement expenditure. For asst. yr. 1980-81, there are 3 other points. ITO has disallowed Rs. 2,000 out of travelling expenditure. In our opinion, this must be deleted. He had further disallowed 1/3rd of telephone expenditure. We find that telephone expenditure claimed by assessee is only in respect of telephone on business premises. Prima facie this expenditure is for purpose of business. So disallowance of Rs. 2,430 should also be deleted. Similarly, sundry expenses of Rs. 3,000 also should be deleted. In result, both appeals are partly allowed. *** TASHKENT TEXORIUM v. INCOME TAX OFFICER