9911796707
TMI Blog1983 (4) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... e claimed was in the nature of entertainment expenditure and disallowed the same. On appeal it was contended on behalf of the assessee that the amount of Rs. 7,359 had been spent on supplying tea and cool drinks to customers and employees at head office, branch office and at the workshop. The AAC observed that the amount spent on tea and cool drinks supplied to employees had not been indicated. Expenditure on provision of tea and cool drinks to customers, in his opinion, was in the nature of entertainment expenditure. Following a decision of the Allahabad High Court in Brij Raman Dass & Sons v. CIT [1976] 104 ITR 541, he upheld the disallowance made by the ITO. When the matter came before the Appellate Tribunal, it referred to the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Patel Brothers & Co. Ltd. [1977] 106 ITR 424, took the view that extension of hospitality does not always amount to entertainment and that it is so only where the hospitality is lavish or on grand extravagant or liberal scale. In this view, small courtesies like serving tea, coffee or refreshments cannot be raised to the dignity or status of "entertainment ". The several cases that have been decided in regard to this issue have been collected at p. 96 of Kanga and Palkhivala on The Law and Practice of Income Tax (Supplement to 7th Edn.), pp. 1440-1 of Vol. II of Chaturvedi and Pithisaria's Income Tax Law (3rd Edn.) and pp. 1778-9 of Vol. II of Sampath Iyengar on Law of Income Tax (7th Edn.). To this list may be added three decisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred on customers and constituents, a deduction only to the extent of a portion of the sum of Rs. 7,359 which had been disallowed. Considering the claim of the assessee against the background of its turnover and profits, we are of the opinion that such a small amount incurred by the assessee, even assuming that it is for the supply of tea and cool drinks to customers, cannot be described as expenditure in the nature of entertainment expenditure. Even in the decision of the Full Bench of the Punjab High Court which has been strongly relied upon by the Department, it has been pointed out that the matter would ultimately be one of degree and that the point should not be stretched to the extent of disallowing petty claims. It is for these reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X
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