Law:

Section:

section 37(2b) of the income-tax act, 1961 [as it stood before 1-4-1977]-entertainment expenditure-assessee's claim for deduction of business promotion expenses was disallowed in full by ito without going into details and aac allowed partial relief-whether tribunal was justified in confirming aac's order without proper consideration and discussion-held, no [reference returned unanswered for de navo consideration by tribunal Facts The assessee-company was carrying on the business of printing and publishing. For the assessment years 1972-73 to 1974-75, it claimed certain amounts as 'business promotion expenses', but the ITO, without going into details, rejected the claim in full under section 37(2B) as it stood then. On appeal, the AAC held that only the amounts spent on certain items alone could be brought within section 37(2B). He did not advert to other items of expenditure. The Tribunal, on further appeal, confirmed the AAC's order. On reference: Held Entertainment is a word of ordinary speech. Even those who know very little English can understand what entertainment, entertainment tax, variety entertainment and other cognate expressions mean. Consequently, it is no use rushing to the dictionary to get at the meaning of the word 'entertainment' simply because the statute does not provide a select definition of it. Parliament must have picked out entertainment expenditure as a non-deductible item not because it is personal expenditure of the assessee but precisely because it is business expenditure. Personal expenditure met out of business funds does not need any specific provision for its disallowance. The word must, therefore, be understood to bear a meaning which no businessman is likely to misunderstand. Consequently, hospitality, such as offering a cup of tea or coffee to a customer, is not to be confused with entertainment. The words 'in the nature of preceding the words 'entertainment expenditure do not make the latter an expression with an expansive meaning so as to include expenditure which is akin to but not quite the same thing as entertainment expenditure. It could have been so if the statute had first defined 'entertainment expenditure' and then…

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