TMI Blog1975 (4) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ,653 being the expenditure incurred on providing tea, lassi, jalpan, etc., to the customers. The Income-tax Officer allowed a sum of Rs. 5,000 only out of this expenditure in view of the provisions of section 37(2A) of the Act and disallowed the balance. The assessment order was upheld on appeal by the Appellate Assistant Commissioner of Income-tax as also by the Income-tax Appellate Tribunal on second appeal. At the instance of the assesses the Tribunal has referred the following question of law for our opinion. " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming disallowance of the expenses of Rs. 13,653 under section 37(2A) of the Income-tax Act, 1961 ? " The income-tax authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overed by section 37, it would not be allowable at all. Any expenditure, for instance, incurred by an assessee on social entertainment will be an expenditure of personal nature and will not be allowable. It was then argued that the expenditure in question is not of the nature of entertainment expenditure. It is urged that " entertainment " does not include the provision of refreshment, but is confined to amusement and " gratification of some sort other than food, meat and drink " Reliance was placed upon the meaning of the word " entertainment " as given in the Stroud's Judicial Dictionary. In the same book the word " entertainment " for purposes of Refreshment Houses Act, 1860, has been defined to meant building kept open for public ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f entertainment. In Bentleys, Stokes Lowless v. Beeson (H. M. Inspector of Taxes) a firm of solicitors incurred expenses in entertaining clients. The entertainment consisted of providing lunch to the clients. It was held that expenditure was incurred wholly and exclusively for purposes of business and was an allowable deduction. The same is the position in the instant case. The petitioner has been providing to its customers refreshments and this constitutes an expenditure in the nature of " entertainment expenditure ".The entire expenditure would have been allowed but for the amendment introduced by section 37(2A) which restricts the allowance of such an expenditure to a maximum limit of Rs. 5,000. We, accordingly, answer the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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