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TMI Blog1996 (7) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 37(2A) by Finance Act, 1983, the expenses incurred by the assessee would come within the ambit of section 37(2A) and to the extent of Rs. 5,000 only of such expenses are allowable. 2. We have heard the learned departmental representative Sri P.I. John and the learned representative of the assessee, Sri Sony Mathew. Their arguments are taken into consideration. 3. The assessee claimed incidental expenses incurred during the course of auction of cardamom at Rs. 29,950 for the assessment year 1986-87 and Rs. 53,377 for the assessment year 1987-88. According to the assessee, it had claimed incidental expenses relating to the assessment year 1985-86, but the Assessing Officer did not allow the claim more than the prescribed limit of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure on provision of hospitality of every kind by the assessee to any person whether by way of provision of food or beverages or in any other manner whatsoever and whether or not such provision is made by reason of any express or implied contract or custom or usage of trade. He also submitted that the provisions of section 37(2A) of the Act are attracted in this case and, therefore, the assessee is entitled to the benefit of deduction only to the extent of the prescribed limit. Sri John further submitted that the assessee is not entitled to deduction of the entire expenses incurred on providing food to bidders as claimed by it. 6. Sri Sony Mathew, the learned representative for the assessee filed notes of arguments and we have peruse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred on entertainment. 7. Sri John, the learned departmental representative, while trying to meet with the arguments advanced on behalf of the assessee relied on Explanation 2 to section 37(2A) and urged firstly that the entire expenditure incurred on outsiders or customers cannot be allowed, but only to the extent of Rs. 5,000 provided under the provision. He submitted that there is nothing on record to indicate that any employees have participated in the auctions and if so what is the expenditure incurred on such employees in order to allow to that extent. He further explained that the expenditure of every kind includes any kind of expenditure including provision of food, beverages, tea, coffee, etc. He relied on the decision of the Ker ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o included in Explanation 2 to section 37(2A) to mean that expenses on the provision of such items are in the nature of 'entertainment expenditure' incurred on outsiders. Therefore, allowing the entire expenditure as a deduction, except the prescribed limit of Rs. 5,000 is not correct and acceptable. The assessing Officer has already allowed the expenditure to the extent of Rs. 5,000 and the learned CIT(Appeals) was not justified to allow the balance amount disallowed by the Assessing Officer for these two years, relying on the order of the CIT(Appeals) for the assessment year 1985-86. The department did not come in appeal against the order of the CIT(Appeals) for the assessment year 1985-86, but that does not mean that the department had a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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