1982 (1) TMI 78 - AT - Income Tax

Summary

Issues:
1. Rectification of assessment order u/s 154 based on the treatment of Rasoi expenses as entertainment expenditure.
2. Divergence of views among different High Courts on the treatment of expenditure on food and refreshment by a businessman to constituents.

Analysis:

1. The appeal before the Appellate Tribunal ITAT Amritsar involved the rectification of an assessment order u/s 154 concerning Rasoi expenses treated as entertainment expenditure. The ITO initially allowed Rs. 12,692 as Rasoi expenses but later rectified the assessment, disallowing Rs. 11,692 based on a Punjab and Haryana High Court decision. The CIT (Appeals) upheld the rectification, relying on the same High Court's decision in Mohan Lal Kansal's case. The assessee contested this, citing divergent views of other High Courts and arguing against the rectification under s. 154. The Tribunal found merit in the assessee's argument, emphasizing the existence of differing views and vacated the CIT (Appeals) decision, canceling the rectification order.

2. The second issue revolved around the divergence of views among different High Courts regarding the treatment of expenditure on food and refreshment provided by a businessman to constituents. While the Punjab and Haryana High Court considered such expenses as entertainment expenditure, other High Courts, such as Gujarat and Madras, did not categorize them as such. The assessee argued that the rectification under s. 154 was erroneous due to conflicting judicial opinions. The Tribunal agreed with the assessee, highlighting the need to consider all High Court decisions on the matter. Citing a Calcutta High Court decision, the Tribunal concluded that with conflicting views, the ITO could not rectify the assessment based on a single High Court ruling. Therefore, the Tribunal allowed the appeal, emphasizing the importance of considering diverse judicial opinions in matters of rectification under s. 154.