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[2007] 294 ITR 499 (RAJ.) HIGH COURT OF RAJASTHAN Commissioner of Income-tax v. State Bank of Bikaner & Jaipur MRS. GYAN SUDHA MISRA AND DR. VINEET KOTHARI, JJ. D.B.I.T. REFERENCE NO. 69 OF 1981 JULY 6, 2006 Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of â–  Where assessee bank had claimed Rs. 1,71,791 as expenses towards entertainment treating it as business development expenditure wholly allowable on the premise that bank had to entertain customers and other visitors who visited bank, expenditure so incurred on entertainment of customers or other visitors by 400 branches of assessee bank in the entire State, could not be treated as lavish in any manner and, therefore, could not be disallowed The assessee-bank had claimed Rs. 1,71,791 as expenses towards entertainment treating it as business development expenditure wholly allowable on the premise that the bank had to entertain customers and other visitors who visited the bank, and it was essentially for the development and promotion of business of the bank. The Tribunal allowed the assessee's claim. Held that the Tribunal had given cogent and convincing reason while allowing the expenses towards entertainment expenditure as business development expenditure since the amount of Rs. 1,71,791 was not an expenditure in just one branch of SBBJ but it had been incurred by 400 branches of the respondent-bank which had rightly been held to be reasonable and not exorbitant or lavish in any manner. It was no doubt true that if the expenditure on entertainment by the assessee could be treated as lavish expenditure or flashy in any manner, the same could not be treated as expenditure towards business development even if that had been spent on entertainment but that question obviously would have to be decided on the facts of each case and merely because the expenditure incurred by the respondent-assessee was a sum of Rs. 1,71,791, the same could not be treated as a precedent for other years as it was the assessing authority who would have to use his judicious discretion to decide as to whether any amount claimed towards entertainment could be treated as towards business…

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