Law: Income Tax Act, 1961

Section: 37(2A),(2B)

Income-tax-----Business expenditure---Entertainment expenses---Expenses on messing of customers amounts to entertainment expenses ---Assessee is not entitled to deduction of such expenditure. Any expenditure incurred by the assessee on providing messing facilities to its customers falls within the purview of the words expenditure in the nature of entertainment expenditure" within the meaning of section 37(2-A) and (2-B) of the Indian Income-tax Act, 1961, and the assessee is, therefore, not entitled to claim the same as deduction. Brij Raman Dass & Sons v. C.I.T. (1976) 104 ITR 541 (All.) and Phool Chand Gajanand v. C.I.T. (1989) 177 ITR 265 (All.) fol. C.I.T. v. Patel Bros. & Co. Ltd. (1977) 106 ITR 424 (Guj) ref. JUDGMENT D.P.S. CHAUHAN, J.--The Income-tax Appellate Tribunal, vide its order dated July 8, 1977, passed in exercise of the powers under section 256 of the Income-tax Act, 1961 (hereinafter to be referred to as "the Act"), referred the following question of law for the opinion of this Court at the instance of the assessee: "Whether, on the facts and in the circumstances of the case, the expenditure of Rs.7,190 could be disallowed under section 37(2-B) of the Act?" On the basis of the said reference, ITR No. 831 of 1977, was registered in this Court. The brief facts are that Phoolchand Gajanand, which is a registered firm, carried on wholesale business and, during the assessment year 1974-75, it claimed deduction of a sum of Rs.7,190 regarding the messing expenditure of its customers as it was running a mess for the facility of the customers. The Income tax Officer disallowed the claim under section 37(2-B) of the Act. On appeal being filed, the Appellate Assistant Commissioner of Income-tax accepted the plea of the assessee and, accordingly, allowed the appeal, after setting aside the decision of the Income-tax Officer and allowed the rebate as claimed by the assessee. Aggrieved therefrom, the Income-tax Officer concerned preferred an appeal before the Income-tax Appellate Tribunal wherein the Tribunal took the view that the expenses incurred in regard to providing messing facilities to the customers by the assessee fell within the category…

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