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TMI Blog1976 (12) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... 77,410 . 93,990 The ITO treated the above expenditure as entertainment. He allowed deduction as follows after applying the provisions of S. 37(2A) of the IT Act, 1961:-- From the income from the other sources Rs. 304 (as against Rs. 1,7071) From business income Rs. 1,968 (as against Rs. 3,929) 2. On appeal before the it was contended that the entire expenditure of Rs. 93,990 represented purely expenditure connected with business development, that the bulk of the expenditure was incurred in the branches of the assessee bank situate in a number of places when the constituents visited the branches during the office hours. It was pointed out that the expenditure was in the nature of " sales promotion and business development" and theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cost of refreshments supplied at the time of opening of new branches of the assessee bank. It was further submitted that the assessee had 257 branches including four foreign branches and the provision of coffee, cool-drinks etc., to their constituents was only common courtesy extended to them to secure more business and there was no lavish expenditure in cocktail parties etc. Reliance was placed on the decision of the Gujarat High Court in the case of CIT, Gujarat II, Ahmedabad vs. Shri Patel Brothers & Co., Ltd. Bardoli,(1) and the other orders of the Appellate Tribunal. The learned representative also reiterated his alternative contention to the effect that the expenditure of Rs. 25,933 incurred outside India is not subject to the statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeded to observe as under at page 92: " It is, therefore, clear to us that the dictionary meaning of the term "entertainment" is to receive and treat with hospitality which broadly means receiving and entertaining strangers or guests in a friendly, generous and liberal way. The term "entertainment" in the context of the IT Act on its true construction and meaning would include the acts or practice of receiving and entertaining strangers and friends in friendly, generous and liberal way. These acts may consist of providing, inter alia, a formal or elegant meal, a banquet and being hospitable in providing for the wants of a guest in a liberal and generous manner. If the Act of entertaining is on a lavish and grand scale involving wasteful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct or arising on account of the long standing custom of a trade, business or profession, cannot amount to entertainment, and acts done in discharge of such obligation cannot be included and covered in the term "entertainment" without violence to language." Their Lordship then proceeded to consider the cases cited on behalf of the Revenue. One such case was the case of M/s Brij Raman Dass & Sons vs. Commr. Of Income-tax Lucknow, on which the departmental representative placed reliance before us in this appeal. With reference to the above Allahabad case their Lordships observed as follows: " We think, with respect to the learned Judges of the Allahabad High Court, that the decision is an over simplification of the problem and they have proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n nature of bare necessity, or by way of ordinary courtesy, or as an express or implied term of contract or employment spelled out from long-standing practice or custom of trade or business, it will not amount to entertainment. (c) If the provision of food or drinks to client, customer or constituent is in liberal and friendly way, it may amount to entertainment having regard to the place, item and cost of such provision. (d) The provision of amusement to client customer or constituent by way of hospitality or otherwise will always be entertainment." With respect we prefer to follow the above dictum of their Lordships of the Gujarat High Court to that of the Allahabad High Court and of the Kerala High Court, on which reliance was placed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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