Law: Income Tax Act, 1961

Section: 37

(a) Income-tax---Business expenditure---Disallowance---Expenditure incurred above prescribed ceiling---Expenditure on advertisement---Meaning of "advertisement"---Presentation of articles to dealers does not amount to advertisement---Expenditure on such articles cannot be disallowed---Indian Income Tax Act, 1961, S.37.(b) Income-tax-------Business expenditure---Expenditure incurred in sponsoring horse race and golf competition---Deductible, Indian Income Tax Act, 1961, S.37.When on admitted facts the inference drawn by the Tribunal is erroneous, a mixed question of fact and law arises. A question with regard to the interpretation of Rule 6B would essentially be a question of law.If, in a given case the High Court while exercising its jurisdiction comes to a conclusion that the Tribunal had failed to take into consideration the relevant fact and/or relevant provision of law, it has the power and the jurisdiction to remit the matter back to the Tribunal.(c) Income-tax-------Business expenditure---Disallowance---Expenditure above prescribed ceiling---Entertainment expenditure---Expenditure on holding conference of dealers is not entertainment expenditure---Payments to club, expenditure on meals, lunch and drinks at branch office--No finding whether expenses amounted to entertainment expenditure---Matter remanded--Indian Income Tax Act, 1961, S.37.The assessee held a dealers conference wherein presentation of 180 boxes of silver was made to the dealers costing Rs.1,16,570. The Revenue treated the expenditure to be entertainment expenses as laid down under section 37(2A) of the Income Tax Act, 1961, and allowed only a sum of Rs.50 per silver box. This was confirmed by the Tribunal.The assessee had incurred expenses amounting to Rs.39,824 in connection with a dealers conference organised at Kothmandu in Nepal. The Assessing Officer disallowed it on the ground that it amounted to entertainment expenses. The Commissioner of Income-tax (Appeals) took the view-that a part of the expenditure relating to the hiring of conference hall, was an allowable deduction which he estimated at Rs.5,000. He accordingly reduced the disallowance by Rs.5,000. An amount of Rs.30,000 by…