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TMI Blog1996 (11) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... of mess expenses on the ground that it is not entertainment expenditure for the assessment year 1974-75 ? 2. Whether, on the facts and in the circumstances of the case and having regard to the retrospective amendment made to section 37(2A) by the Finance Act, 1983, with effect from April 1, 1976, the Tribunal is justified in disallowing the mess expense of Rs. 26,000 and Rs. 28,595, respectively, for the assessment years 1976-77 and 1977-78 on the ground that it is not entertainment expenditure ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that interest paid to Media Banka, Ital Viscose and IDBI on monies borrowed on the purchase of machinery should be allowed as business expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 37(2A) of the Act, with effect from April 1, 1976, which will not be applicable to the assessment year 1974-75. Accordingly, we consider that the order passed by the Tribunal, in allowing the expenditure claimed by the assessee is correct, since it is not lavish expenditure. Therefore, we answer question No. 1 in the affirmative and against the Department. In so far as question No. 2 is concerned, it relates to the assessment years 1976-77 and 1977-78. The assessee incurred entertainment expenditure to the extent of Rs. 26,000 and Rs. 28,595, respectively. According to the Income-tax Officer, they are in the nature of entertainment expenditure and, therefore, not allowed as a deduction. The Commissioner of Income-tax held on appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax (Appeals), however, held that it should be held as a revenue expenditure following the decision in Sivakami Mills Ltd. v. CIT [1979] 120 ITR 211 (Mad). On further appeal, the Tribunal upheld the Commissioner's order, following the aforementioned decision, as also the Tribunal's own order in ITA No. 858/Mds./1980. Inasmuch as the Tribunal followed the decision of this court in Sivakami Mills' case, [1979] 120 ITR 211, which still holds good, there is no infirmity in the order of the Tribunal. Accordingly, we answer question No. 3 in the affirmative and against the Department. In so far as question No. 4 is concerned, it relates to the guarantee commission paid to the bank. According to the assessee, this should be treated as revenue exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1973-74 in T.C. No. 232 of 1982, CIT v. South India Viscose Ltd. (No. 1) [1997] 228 ITR 198, wherein by judgment dated September 19, 1996, this court held that the assessee is entitled to a higher development rebate with regard to machinery installed in the pulp unit. In view of the decision of this court in CIT v. South India Viscose Ltd. (No. 1) [1997] 228 ITR 198, we are of the opinion that the order passed by the Tribunal is in order. Accordingly, we answer question No. 5 referred to us in the affirmative and against the Department. In so far as question No. 6 is concerned, it relates to depreciation allowable on the amount paid as difference in exchange fluctuations. For the years under consideration, the Income-tax Officer has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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