Law:

Section:

Section 37(2A) of the Income-tax Act, 1961 - Entertainment expenditure - Assessment years 1974-75 and 1975-76 - Commissioner (Appeals) considering evidence placed on record and on facts, arrived at conclusion that expenditure incurred by assessee could not be treated as entertainment expenditure within meaning of section 37(2A) - On appeal, Tribunal arrived at a conclusion that section 37(2A) was not applicable - Whether any question would arise from impugned order - Held, no Section 80J of the Income-tax Act, 1961 - Deductions - Profits and gains from new industrial undertakings, ships or hotels, etc. - Assessment years 1974-75 and 1975-76 - Assessee held certain machinery gifted by Government of Australia to Government of India and showed it in balance sheet of company as liability owed to Government of India - Tribunal arrived at a finding that Government supplied plant and machinery, cost of which was to be paid not in cash but in form of share capital of assessee-company and, therefore, said machinery became part and parcel of its assets and it could not be considered to be liability due to Government of India - Whether, on facts, cost of machinery should be included as capital employed by assessee for purpose of computation of deduction admissible under section 80J - Held, yes R.D. Jolly and Rashmi for the Appellant. Rajan Naval for the Respondent. ORDER B.C. Patel, CJ. - At the instance of the Revenue for the assessment years 1974-75, 1975-76, two questions are referred in these two references for opinion of the Court. The questions are as under : (i)Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in confirming the order of the CIT(A) in deleting the disallowance of entertainment expenditure made by the income-tax officer to the extent of Rs. 98,007/Rs. 47,921 in the assessment years 1974-75, 1975-76 respectively despite the express provisions contained in section 37(2A) of the Income-tax Act ? (ii)Whether, on the facts and in the circumstances of case, the Tribunal is correct in law in confirming order of the CIT(A) in holding that the cost of machinery amounting to Rs. 62,32,350/Rs. 2,41,646 for assessment…

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