Khetu Ram Bishamber Dass vs Commissioner of Income Tax

S.S. Sodhi, J.—The matter here concerns the amount spent on entertainment, namely, the running of a kitchen for serving meals to the assessee''s constituents and the allowance claimed in respect thereof. The question of law referred in this behalf is :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that expenses incurred on the running of the kitchen for serving meals to the assessee''s constituents were in the nature of entertainment and, therefore, allowance for the same had to be made in accordance with the provisions of Section 37(2A) of the Income Tax Act, 1961?"

The point in issue stands covered by the decision of our Full Bench in Commissioner of Income Tax Vs. Khem Chand Bahadur Chand, , where, on almost similar facts, in the case of an assessee who was running a regular kitchen for its customers, it was held that the expenditure thereon would be hospitality, whether lavish or frugal, and that the entire expenditure would fall within the ambit of Section 37(2A) of the Income Tax Act, 1961, and would, therefore, be subject to the ceiling limits as prescribed in clauses (i) to (vi) thereof. The question posed is consequently answered in the affirmative, in favour of the Revenue and against the assessee. There will, however, be no order as to costs.