Law:

Section:

Section 37(2A) of the Income-tax Act, 1961 - Entertainment expenditure - Assessment year 1984-85 - Whether expenditure incurred by assessee-company on distribution of suit lengths could not be taken out from nature of entertainment expenses even though it might have been for business - Held, yes Words and phrases - 'hospitality of every kind by assessee to any person' as occurring in Explanation (2) to section 37(2A) of the Income-tax Act, 1961 FACTS The assessee-company incurred expenses on distribution of suit lengths to various persons. During the assessment proceedings, the Assessing Officer disallowed the expenses on the ground that the distribution of suit lengths to various persons was nothing but entertainment expenditure attracting the provisions of section 37(2A) read with Explanation (2). The Commissioner (Appeals) as well as the Tribunal confirmed the action of the Assessing Officer. On reference : HELD The provisions of section 37(1) provide that if any expense is incurred for the purpose of earning income and for profits and gains of the business or profession, that expenditure should be allowed. But sub-section (2A) of section 37 starts with the non obstante clause and provides that notwithstanding anything contained in sub-section (1) or sub-section (2), no allowance shall be made in respect of so much of the expenditure which is in the nature of entertainment expenditure which is in excess of the aggregate amount computed in this sub-section. Explanation 2 to sub-section (2A) further provides and clarifies the doubts that entertainment expenditure includes expenditure on provision of hospitality of every kind by the assessee to any person whether by way of provision of food or beverages or in any other manner whatsoever and whether or not such provision is made by reason of any express or implied contract or custom or usage of trade. The words 'hospitality of every kind by the assessee to any person' include every type of expenditure on entertainment. If the assessee distributed the suit lengths, that could not be taken out from the nature of entertainment expenses. Though, it might be for the business, but once the provision was there, such…

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