Commissioner of Income Tax vs Tulsi Bhai Gordhan Bhai Patel

D.K. Jain, J.

At the instance of the revenue, the Tribunal, Delhi Bench ''E'', has referred u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as ''the Act'') the following questions for our opinion :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in allowing the rasoi expenses amounting to Rs. 4,000 in branch at Gondia claimed by the assessed as an admissible deduction by holding that it is not in the nature of entertainment expenses covered by section 37(2B) of the Income Tax Act, 1961 ?

Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in allowing the hotel expenses amounting to Rs. 12,912 sustained by the Commissioner (Appeals) in the head office claimed by the assessed as an admissible deduction by holding that it is not in the nature of entertainment expenses covered by section 37(2B) of the Income Tax Act ?"

Since in the statement of the case, it has been stated that both the expenses were in the nature of rasoi expenses in the branch office and head office of the assessed, answer to both the questions stands concluded by the decision of the Supreme Court in CIT v. Patel Bros. & Co. Ltd. : [1995]215ITR165(SC) .

In the said decision, it has been held that provision for ordinary meals to outstation customers, according to established business practice, could not be treated as entertainment expenditure.

In the present case, as noticed above, the Tribunal has found that the expenses incurred by the assessed were small courtesies, extended to their customers and, Therefore, could not be treated as entertainment expenditure.

In view of the aforenoted decision, no fault can be found with the view taken by the Tribunal. Accordingly, the questions are answered in the affirmative, i.e., in favor of the assessed and against the revenue.