2009 (10) TMI 2 - HC - Income Tax

Deduction under section 37(2A) - expenditure on providing hospitality - On scrutiny of the details of expenses, it was found by the Assessing Officer that the expenditure includes expenses on account of providing hot and cold drinks, beer and whiskey to foreign tourists. Consequently, it allowed a statutory deduction of Rs.5,000/- and a sum of Rs.1,09,620/- was disallowed treating the expenditure as that of entertainment nature ITAT confirmed the order of AO Assessee pleaded that expenditure disallowed by the Tribunal can be allowed under Section 37 (1) of the Income Tax Act Held that question of deduction under section 37(1) has not be referred to high court therefore answer is restricted to deduction u/s 37(2) order of ITAT uphold.

Summary

The High Court of Allahabad, in the case of 2009 (10) TMI 2 - ALLAHABAD HIGH COURT, heard a dispute related to the Assessment Years 1982-1983 and 1983-1984. The case involved a question referred by the Income Tax Appellate Tribunal, Delhi Bench C, regarding the interpretation of Section 37(2A) of the Income Tax Act. The petitioner, represented by Piyush Agarwal, contested the disallowance of expenditure incurred on providing mineral and aerated water to foreign customers as 'hospitality' by the Tribunal. The Commissioner, Income-tax, Agra initially deleted a portion of the disallowed amount, but the Tribunal ultimately dismissed the appeal filed by the assessee. The High Court, after considering the arguments presented by both sides, concluded that the controversy was settled by previous authoritative judgments and that the expenditure disallowed by the Tribunal could not be allowed under Section 37(1) of the Income Tax Act. Therefore, the Court ruled in favor of the department and against the assessee. No costs were awarded in the judgment.