Law: Income Tax Act, 1961

Section: 37(2A)

(a) Income-tax----Business expenditure---Disallowance---Entertainment expenditure--¬Expenditure on food and light refreshments to trainees and engineers--¬Expenditure could not be disallowed in assessment years 1975-76 & 1976-77---Indian Income Tax Act, 1961, S 37(2-A). (b) Income-tax- ----Business expenditure---Fines and penalties---Penalty on account of late delivery of goods---Penalty was not paid for infraction of law ---Deductible--¬Indian Income Tax Act, 1961, S.37. (c) Income-tax--- ----Income---Business---Remission of liability---Sales tax---Credit given to amounts due as refunds of sales tax---Entry reversed because sales tax assessments had been reopened---There was no extinguishment of liability--¬Amounts not assessable under SA1(1)---Indian Income Tax Act, 1961, S.41. (d) Income-tax- ----Export markets development allowance---Weighted deduction---Sea freight and marine insurance entitled to weighted deduction---Commission paid to agents entitled to weighted deduction---Portion of miscellaneous expenditure incurred on exports---Entitled to weighted deduction---Indian Income Tax Act, 1961, S.35-B. The assessee claimed deduction of expenditure incurred in providing food and light refreshments to trainees and engineers in the assessment years 1975-76 and 1976-77. The assessee-company manufactured electric switch¬gears. The plea of the assessee was that seminars and conferences were arranged by the company from time to time, wherein trainees and engineers working with the dealers were invited so that the items manufactured by the assessee-company could be made known and explained to them. Therefore, the main purpose for organizing the conferences was advertisement and publicity. The expenditure was disallowed by the Income tax Officer and the Tribunal. On a reference: Held, that food and light refreshment had been served to the trainees and engineers attending the dealers conference organised by the assessee. These expenditures could not, therefore, be treated to be in the nature of entertainment but on account of business necessity and expediency. They did not fall within the ambit of section 37(2-A) of the Income Tax Act, 1961, and could not be…

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