TMI Blog2001 (1) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... er, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the expenditure of Rs. 43,403 did not constitute entertainment expenditure within the meaning of section 37(2B) and was therefore not liable to be disallowed? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that the cost of machinery amounting to Rs. 1,24,27,650 gifted by the Government of Australia to the Government of India and given by the Government to the assessee against shares of the assessee to be issued to the Government and shown in the balance sheet of the assessee-company as a liability owed to the Government of India, should be included as capital employed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso found that expenditure of Rs. 6,099 was incurred in connection with conference of the Social Welfare Departments of various Governments, incurred at six places, in connection with the assessee's business. A sum of Rs. 2,771 was incurred on lunch and dinner to foreign dignitaries who had come to help the assessee to run its business more efficiently. Accordingly, it was held that the entire amount was to be allowed as expenditure. Similarly, the assessee had claimed deduction under section 80J of the Act in respect of the imported machinery worth Rs. 1,24,27,650. The said machinery was received as a gift from the Government of Australia under the Colombo Plan. It was given to the assessee on the understanding that no money was to be pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision of the apex court in CIT v. Patel Bros. and Co. Ltd. [1995] 215 ITR 165. In view of this position, the answer to the question referred is in the affirmative, in favour of the assessee and against the Revenue. So far the second question is concerned, we find that the Assessing Officer proceeded on the basis that there was no finality attained on the question of issuance of shares, if any. In fact the assessee itself was treating the amount as liability owed by the company to the Government. The Appellate Assistant Commissioner, however, held otherwise. According to him, the amount was never payable to the Government as such. The intention from the beginning was that no payment was to be made in cash, but there was to be allotme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Commissioner again held that the amount cannot be compared with the share application money received by the company. The assessee itself had been showing the amount as liability. It is also submitted that the decisions referred to by the Tribunal, i.e., Century Enka Limited v. ITO, will have really no application in view of the decision of the apex court in Lohia Machines Ltd. v. Union, of India [1985] 152 ITR 308. We have considered the submissions made by learned counsel for the Revenue and we find substance in the contention. In fact the factual position does not seem to have been properly appreciated by the Tribunal. It merely followed the reasoning given by the Appellate Assistant Commissioner without analysing as to whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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