TMI Blog2003 (3) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... should be deemed a necessary expenditure under section 37(1) of the Income tax Act, 1961?" - The judgment and order of the Tribunal is illegal and we answer the aforesaid question in the negative, that is, in favour of the Revenue and against the assessee by holding that the expenses in question amounts to entertainment expenditure in view of the Explanation. - - - - - Dated:- 13-3-2003 - Judge( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture which according to him was in the nature of entertainment expenditure, vide order dated November 15, 1979. The said order was confirmed in appeal by the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) has held that the disallowance of entertainment expenses to the extent of Rs. 26,555 is fully justified. The matter went in further appeal before the Income-tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head 'Profits and gains of business or profession.' (2) Notwithstanding anything contained in sub-section (1), no expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, but does not include expenditure on food or beverages provided by the assessee to his employees in office, factory or other place of their work. (2B) Notwithstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply in relation to the assessment year 1976-77. In view of the addition of Explanation 2 to section 37(2A) and as interpreted by the Supreme Court in the above case, we hold that the expenses incurred by the assessee on the boarding and lodging facilities given to auditors and other Government and semi-Government servants visiting the asses see factory form part of the entertainment expenditure. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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