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Issues Involved:
The judgment addresses the following issues: 1. Disallowance of guest house expenses under section 37(4) of the Income-tax Act, 1961. 2. Disallowance of expenses on tea, lunch, etc., as entertainment expenses under section 27(2B) of the Act, 1961. 3. Allowance of deduction for contribution made to the Gujarat State Co-operative Union under section 69 of the Gujarat State Co-operative Societies Act. Disallowed Guest House Expenses (u/s 37(4)): The court referred to a previous decision involving guest house expenses, where it was held that such expenses were incurred for commercial expediency to provide hospitality to visitors, employees, and technicians. Citing this precedent, the court answered in favor of the assessee, stating that the amount in question was not disallowable under section 37(4) of the Act. Entertainment Expenses (u/s 27(2B)): Drawing from a prior case, the court affirmed that expenses on tea, lunch, etc., could not be disallowed as entertainment expenses. Relying on established case law, the court answered this question in favor of the assessee, in line with the previous decision. Deduction for Contribution to Co-operative Union (u/s 69): The court referenced a specific case where it was determined that contributions to a cooperative fund were allowable as business expenditure. Based on this precedent, the court concluded that the deduction for the contribution made to the Gujarat State Co-operative Union was permissible under section 69 of the Gujarat State Co-operative Societies Act. In conclusion, the court answered all three questions in the affirmative and in favor of the assessee, citing relevant legal precedents to support its decisions. The reference was thus resolved in favor of the assessee with no order as to costs.
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