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Section 37(2B) of the income-tax act, 1961-Entertainment expenditure-Assesses claimed rs. 7,359 spent on supply of soft drinks to customers and employees as sales promotion expenses which was negligible when compared with its turnover of over rs. 3 crores-Whether such expenditure amounted to entertainment expenditure as contemplated in section 37(2B)-Held, on facts, no Facts The assessee-company, having turnover of over Rs. 3 crores, claimed a comparatively small sum of Rs. 7,359, being spent on tea and cold drinks provided to customers and employees at the head office, branch office and factory, as sales promotion expenses. The ITO treated the same as entertainment expenditure and disallowed it. On appeal, the AAC upheld the disallowance. On further appeal, the Tribunal deleted the addition. On reference: Held From the various judicial decisions on the point, it is clear that to a considerable extent, the question is one of degree and fact. In the instant case, the assessee's sales during the relevant previous year were worth Rs. 3.28 crores and the income returned was over Rs. 10 lakhs. The sales promotion expenses claimed by the assessee amounted to Rs. 7,359, which was a very insignificant and paltry amount in the context of the magnitude of the assessee's business. Such a small amount incurred by the assessee, even assuming that it was for the supply of tea and cold drinks to customers, could not be described as expenditure in the nature of entertainment. Cases referred to Brij Raman Das & Sons v. CIT [1976] 104 ITR 541 (All.), Brijraman Das & Sons v. CIT [1982] 12 Taxman 69 (All.), CITv. Khem Chand Bahadur Chand [1981] 131 ITR 336 (Punj. & Har.)(FB), CIT v. Navalmal Punamchand [1982] 135 ITR 801 (MP), CIT v. Patel Bros. & Co. Ltd. [1977] 106 ITR 424 (Guj.), CIT v. Rajkumar Mills Ltd. [1982] 135 ITR 811 (MP) and CIT v. Shyamlal Ramcharan [1982] 11 Taxman 131 (MP). IT REFERENCE NO. 155 OF 1978. Wazir Singh and P.V. Misra for the Petitioner. Judgment RANGANATHAN, J.- This is an income-tax Rs. 7,359 as a deduction in the computation reference relating to the assessment year 1972-73. Supreme Motor (P.) Ltd., the assessee respondent, claimed,…

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