TMI Blog2005 (3) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... has referred the following two questions of law under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the opinion to this court : "1. Whether, on facts and in law, the Tribunal was correct in holding that the expenditure on distribution of sweets, dry fruits and gift packs on the eve of Deewali being business expenditure could not be allowed under section 37 of the Income-tax Act but its allowability was to be restricted under section 37(2A) of the Act being expenditure in the nature of entertainment ? 2. Whether the Tribunal was correct in holding that the expenditure of Rs. 99,586 incurred by the company in making donation in cash and kind to educational institution for development of play ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant and Shri A. N. Mahajan, learned standing counsel for the Revenue. Learned counsel for the applicant submitted that Explanation 2 which was inserted with effect from April 1, 1976, by the Finance Act, 1983, widened the scope of the words "entertainment expenditure" as expenses and, therefore, the limits provided under sub-section (2A) of section 37 of the Act would not be applicable. So far as the advertisement expenses are concerned he submitted that the applicant had incurred an expenditure for advertisement and in fact a board of the applicant's company was also installed in the deer park of Vardhman Academy. Thus, the expenditure was liable to be allowed. Learned standing counsel, however, submitted that after insertion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words "entertainment expenditure" has been widened and the words "entertainment expenditure" which normally did not include hospitality of other normal courtesies, as held by the apex court in the case of CIT v. Patel Brothers and Co. Ltd. [1995] 215 ITR 165 had been included by giving an extended meaning. Thus, the expenditure incurred on tickets purchased by the applicant and dry fruits and sweets for Deewali and expenditure incurred on lunches and dinners to officers and engineers of different State Electricity Boards would be covered under the term "entertainment expenditure" and the limit provided under sub-section (2A) of section 37 of the Act would be attracted. 6. So far as the expenses incurred on alleged advertisement are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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