TMI Blog1988 (1) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... o dispose of at the outset. 2. The first point was against the disallowance of a sum of Rs. 22,320 on account of hotel expenses. This amount was disallowed by the ITO on the ground that they were in the nature of entertainment expenses, whereas it is the claim of the assessee that these expenses were incurred in the normal course of business and pursuant to the long standing trade practice. Reliance, in support of the admissibility of this claim, was placed upon a decision of the Gujarat High Court in the case of CIT vs. Patel Bros. and Co. Ltd. (1977) 106 ITR 424 (Guj) The Finance Act, 1983 by inserting Expln.-2 in s. 37(2A)with retrospective effect from 1st April, 1976 expanded the meaning of the expression 'entertainment expenditure' to include the expenditure on the provision of hospitality of every kind, by the assessee to any person, whether by way of provision of food or beverages or in any other manner whatsoever, whether or not such provision was made by reason of any express or implied contract or customs or usage of trade and excluded from its purview, the expenditure incurred on food and beverages by the assessee to his employees in office, factory or other place of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance of Rs, 25,000 only was deleted. This year there was no such disallowance made by the Department. Akin to the disallowance of Rs. 1,60,000 made in the previous year, the total disallowance was only Rs. 25,000. Since the Tribunal had already confirmed a disallowance of Rs. 1.60,000 in the previous which leads us to believe that some disallowance year was called for, since the disallowance made this year was only Rs. 25,000 and since the assessee had not maintained any stock account, and since the existence of un-utilised bulbs was not denied, we think that the disallowance of Rs. 25,000 was not unwarranted, nor can it be said to be excessive. We, therefore, confirm the disallowance. 4. The next ground taken up was disallowance of expenses out of shooting Rs.1,00,000, set erections and costume expenses-Rs. 50,000, shooting set erections-Rs. 35,068 and the entertainment expenses Rs. 8,474. At the time of hearing, the learned counsel for the assessee did not press these disallowances. Those disallowances are, therefore, confirmed. 5. Ground no. 6 is a ground objecting to the disallowance of claim said to have been made under s. 35B for exports market development. The Div ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after a review of the entire case law on the subject, took the view that the finding of the ITO not having been appealed against to the AAC, it must be assumed that the assessee was not aggrieved by the finding of the ITO and that it had accepted the same. Further, the finding of the ITO not being the subject matter of appeal before the AAC and he not having been called upon to adjudicate the same, and not having adjudicated upon the same, there could not be any decision of the AAC on the finding of the ITO and, therefore, it could not be said that the assessee was aggrieved by the decision of the AAC in respect of the said matter so as to entitle him to file an appeal to the Tribunal under s. 253 against the order of the AAC on the said finding. Sitting in Bombay, dealing with a case falling within the Bombay High Court's jurisdiction, we are bound by the decision of the Bombay High Court and respectfully following the Bombay High Court, we must hold that the assessee not having filed an appeal to the CIT(A)against the finding of the ITO, rejecting the assessee's claim, for the disallowance of weighted deduction under s. 35B, is not entitled to raise this plea before the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the AAC to entertain a new ground. This is what the Bombay High Court observed; "In the instant case we are not required to consider whether there is any different between the powers of the AAC and the Tribunal in this petition. We are considering the powers of the AAC (for Commissioner of Appeals) to entertain a new ground. Before either of the decisions is applied, let us consider, whether there was any material on record in the present case, which would have enabled the AAC to uphold the assessee's claim for relief made for the first time before the AAC." This would show that the Bombay High Court had not dealt with the powers of the Tribunal in this regard and had left it open. By this decision, therefore, it cannot be argued, nor can this decision be construed as laying down the ruling that the Tribunal can entertain a ground against the order of the AAC even though such a ground was not taken up before him. In other words, the decision rendered by the Bombay High Court in (1983) 141 ITR 326 (Bom), remain unaltered. We are, therefore, duty bound to follow the Bombay High Court's decision, which holds that in a situation of this nature the assessee cannot be said to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tewari for the Revenue. After considering the arguments, addressed to us and also considering the case law relied upon by them and also going through the decision of the Tribunal given or the subject, we are of the opinion that the decision given in the case of ITO vs. Grajlakshmi Co. by the Madras Bench reported in (1982) 14 TTJ (Mad) 287 : (1982) 2 ITD 420 (Mad) does not require any reconsideration by us. When we say this, we do not mean to say that under the law, we are empowered to reconsider a decision given by a Division Bench with a view, or, so as to, over rule it, but we do feel that in a larger Bench, we are entitled to consider the question again in the light of the new developments either in the sphere of Law, or in the realm of facts and then come to a fresh conclusion which may be in accordance with the earlier views or opposite to it. Having considered the legal position and the facts in this light, we say that the opinion expressed by the learned Bench in the case of Grahalakshmi and Co and follow by another Bench of the Madras in the case of 5th ITO vs. K.A. Khader and Sons. reported in (1983) 17 TTJ (Mad) 75 : (1983) 6 ITD 65 (Mad), do appear to us to be stating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s defined in s. 5 of the Negotiable Instruments Act. If found that a hundi is different from a promissory note, as a promissory note contains a promise to pay, whereas a Bill of Exchange contains an order to pay. A Bill of Exchange is also negotiable as well as a promissory note. It distinguished a Bill of Exchange from a hundi only from the point of view of negotiability by endorsement. If a Bill of Exchange is negotiable only by endorsement, it does not partake the character of a 'hundi' but if it is negotiable without endorsement, it partakes the character of a 'hundi'. By laying these guidelines, the Tribunal examined the instrument in that case and found that it bore a close resemblance to a promissory note as it satisfied all the requirements of a promissory note and is a bill of exchange and not a 'hundi' at all. Ultimately the decision of the Tribunal in that case turned on the document executed in that case. The conclusion of the Tribunal was that if the document was in the nature of a promissory note, it could not be termed as a ' hundi' and, therefore, the provisions of s. 69D would not be applicable. This was also the view taken by another Bench of the Madras in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e we have found, that the test laid down by the Madras Benches is very appropriate and correct, we are of the opinion that test needs no change even after due re-consideration. 8. Now in Appendix I, to the Negotiable Instrument Act by M.S. Parthasarthy, 16th Edition, the term 'hundi' has been explained. It says, a bill of exchange in the vernacular language is generally called a 'hundi', The term 'hundi' was formerly applicable to native bills of exchange. A promissory note is called a teep and in certain areas as a 'rukka'. Hundis are negotiable instruments written in an oriental language. They are some times bills of exchange and at other times promissory notes and are subject to local usage's and are un-affected by the provisions of the Negotiable Instruments Act. A bill of exchange may include a hundi but hundi does not include a bill of exchange. The term hundi as generally understood includes all indigenous negotiable instruments whether they be in the form of notices or bills. The word 'hundi' is a term wider than the bill of exchange. The instrument in order to be a hundi must be capable of being sued upon by the holder in his own name and must by the custom of trade be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ker must be certain; (f) the sum payable must be certain; (g) the instrument must contain a promise to pay money and money only; and (h) the payee must be certain. 9. Applying these requirements to the document before us, executed in this case, it does not appear to be a promissory note at all, because there is no promise to pay, which is an essential element of a promissory note, even though it can be said that the other requirements of a promissory note are present. Sec,5 of the Negotiable Instruments Act defines a bill of exchange as follows; "a bill of exchange is an instrument in writing only to or to the order of a certain person or to the bearer of the instrument." We will not go into the question at this stage as to what distinguishes a bill of exchange from a promissory note, but we would like to mention that the document executed in this case can be said to be a bill of exchange because it contains an un-conditional order directing a certain person to pay the stated sum of money to the order of certain person namely, Pokardas Jawaharlal. The document executed in this case cannot, therefore, be said to be a promissory note but only a bill of exchange. This c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le by delivery thereof." An instrument payable to the bearer means an instrument, which is expressed to be so payable or on which the only or the last endorsement is an endorsement in blank. Where an instrument payable to bearer is only to be transferred to any person so as to constitute that person the holder thereof, the only thing, the section requires to be done, is to deliver it to such person. Sec, 48, deals with negotiation by endorsement and it provides; "Subject to the provisions of s, 58, a promissory note, bill of exchange or cheque payable to order, is negotiable by the holder by endorsement and delivery thereof," Thus this section deals with the negotiation of an instrument payable to order and stipulated that those instruments are negotiable only by an endorsement of the holder followed by delivery. In order that a transferee of an instrument payable to order acquires the rights of a holder in due course, the instrument must be negotiated in the manner prescribed by this section. If however, the holder transfers by simple delivery, an instrument payable to order, without endorsement, the transferee merely acquires the rights of an assignee without the advanta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the state of law. This ground is, therefore, decided in favour of the assessee. 11. Then we come to the last ground argued in this case, namely whether the disallowance of publicity expenses of Rs. 1,10,482 was not legal. In Paras 18 and 19 of the CIT's order, this point was dealt with, as under :— "18. The last ground in this appeal is against the disallowance of a sum of Rs.1,10,482 out of the publicity expenses. The ITO has disallowed this amount under the provisions of s. 37(3A). It is submitted that by producing the film 'Satyam Shivam Sundaram', the appellant had set up an industrial undertaking for the manufacture of production of an article and, therefore, in view of the provisions of s. 37(3D) no disallowance should have been made out of the expenditure incurred by the appellant on advisement and publicity. 19. The appellant had taken up this plea before the ITO also but he did not accept it on the ground that the appellant had produced several films in the past and therefore, the film 'Satyam Sivam Sundaram' cannot be said to be a new product. I have considered the matter carefully and in my opinion there is no force in the argument of the learned counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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