TMI Blog1995 (7) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure of a sum of Rs. 1,93,417 in computing the total income of the assessee under the Act under section 37(2A) of the Act over and above the permissible limit of Rs. 30,000, thereunder. Learned counsel for the Revenue justified the order of the Tribunal in view of the Explanation 2 to section 37(2A), which was introduced by the Finance Act, 1983, with retrospective effect from April 1, 1976. Hence, he submits that this tax case has to be decided in favour of the Revenue and the following question referred to this court has to be answered in the affirmative : " In the facts and circumstances of the case was the Tribunal correct in law in restoring the disallowance of Rs. 1,93,417 made by the Income-tax Officer under section 37 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance, observing as follows : " 1. Entertainment.--The Income-tax Officer had disallowed Rs. 1,93,417 under section 37(2A), after allowing only Rs. 30,000. It is the company's contention that expenditure incurred on providing tea, coffee, etc., for the staff or customers would not come under entertainment since such expenditure was not lavish and that compared to the company's turnover and profit, the amount is insignificant. 2. I find that this point has already been decided in the appellant's favour both by my predecessor and the Appellate Tribunal for the assessment year 1977-78. In the circumstances and in view of the decision of the Madras High Court in CIT v. Karuppuswamy Nadar and Sons [1979] 120 ITR 140, the disallowance i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals). After due consideration of the facts and the amendment of law especially Explanation 2, there is no doubt that the expenditure under consideration so far as related to customers was entertainment in nature and, therefore, disallowance was called for. The Income-tax Officer has already allowed deduction under section 37(2A) at Rs. 30,000. We, therefore, restore the disallowance made by the Income-tax Officer in this regard as the Commissioner of Income-tax (Appeals) is not justified in deleting the same." (emphasis supplied). Inter alia, it is stated in the above passage that learned counsel for the assessee supported the order of the Commissioner of Income-tax (Appeals). But, the said order having been passed on October 23, 1982, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 (SC) that a question of law can be said to arise out of the Tribunal's order only if it is dealt with by the Tribunal or is raised before it, though not decided by the Tribunal. Further in Pullangode Rubber and Produce Co. Ltd. v. Commr. of Agrl. I. T. [1970] 76 ITR 7 (SC) also it has been held that a question based on incorrect assumption of facts not found by the Tribunal, cannot be said to arise out of its order. In the present case, we can't assume, in the light of the abovereferred to features, that the expenditure was partly for employees and that too on food or beverages provided inside the place of work. The net result is, the question referred to this court is answered in the affirmative and in favour of the Revenue. No costs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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