Law:

Section:

Section 37(2A) of the Income-tax Act, 1961 - Entertainment expenditure - Assessment year 1972-73 - Assessee-firm was carrying on business of purchase and sale of kirana items and also as a commission agent in food-grains - Whether expenditure incurred on account of providing messing for various constituents was an entertainment expenditure - Held, yes FACTS The assessee-firm was carrying on the business of purchase and sale of kirana items and also as a commission agent in foodgrains. For the assessment year 1972-73, the assessee claimed deduction in respect of the expenditure incurred on account of providing messing for the various constituents. The ITO disallowed the assessee's claim. On second appeal, the Tribunal held that since messing expenditure was not in the nature of entertainment expenses, it could not be disallowed by virtue of sub-section (2A) of section 37. On reference: HELD In view of the decision of the Full Bench in the case of Phool Chand Gajanand v. CIT [1989] 177 ITR 265 (All.) in the instant case the Tribunal was not justified in holding that since messing expenditure were not in the nature of the entertainment expenses, it could not be disallowed under section 37(2A). Therefore, the assessee-firm was not entitled to deduction for the same. CASE REVIEW Phool Chand Gajanand v. CIT [1989] 177 ITR 265 (All.) (FB) followed and relied upon. CASES REFERRED TO Phool Chand Gajanand v. CIT [1989] 177 ITR 265/44 Taxman 15 (All.)(FB). JUDGMENT Reddy, CJ. - Under section 256(2) of the Income-tax Act, 1961 ('the Act'), the Tribunal has stated the following two questions: "1. Whether, on the facts and in the circumstances of the case, the amount of Rs. 12,000 spent on messing (Rasoi) could not be called expenditure in the nature of entertainment expenditure within the meaning of section 37(2B) of the Income-tax Act, 1961? 2. Whether, on the facts and in the circumstances of the case, the Tribunal's view that the disallowance of messing expenses amounting to Rs. 12,000 under section 37(2B) of the Income-tax Act, 1961 was not justified, is correct in law?" 2. The assessee is a registered firm carrying on the business of purchase and sale of kirana items…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492