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TMI Blog1990 (12) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... 750 2,558 2. Sh. D.B. Nagpal 20,087 4,800 784 3. S.K. Das 7,9993 7,800 3,600 1,772 21,055 4. R.K. Sahni 8,3664 3,600 1,399 23,664 . Total disallowance . . . . 48,061 2. Before the CIT(A) the disallowance of Rs. 2558 in the case of Sri H.L. Gulati and Rs. 784 in the case of Shri D.B. Nagpal only was contested. In the case of Shri Gulati a sum of Rs. 8,950 was the rent paid for the accommodation provided to him free of cost. Similarly in the case of Mr. Nagpal, a sum of Rs. 4,800 was paid for the accommodation provided free to him by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uisite assessable in the hands of the employee under s. 3 of the IT Rules, the same High Court in the case of CIT vs. Ashoka Marketing Ltd. (1990) 88 CTR (Cal) 182 : (1990) 181 ITR 493 (Cal) has held that where the actual expenditure is known there is no need to take resort to r. 3 of the IT Rules. This view has again been affirmed by the same High Court in the case of the CIT vs. Shree Krishana Gyanoday Sugar Ltd. (1990) 186 ITR 541 (Cal). The Full Bench of the Kerala High Court in the case of CIT vs. Forbes, Ewart Figgis (P) Ltd. (1981) 24 CTR (Ker) 87 (FB) (1982) : (1980) 138 ITR 1(Ker) (FB) has also taken the same view. The Madras High Court in the case of CIT vs. P.R. Ramakrishana (1980) 18 CTR (Mad) 52 : (1980) 124 ITR 545 (Mad) rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowable as deduction under s. 37(1). Learned counsel further contended that in any case a sum of Rs.18,906 incurred on account of gifts, etc., could not be treated as entertainment expenses. Learned Deptl. Representative supported the order of the Revenue authorities. 6. We have given our careful consideration to the rival contentions. We find that the assessee in its note to the CIT(A) has admitted that the expenses represent mainly the cost of tea, cold drinks, meals, etc., provided to customers. In view of the retrospective amendment to s. 37(2A), the expenditure incurred on providing any kind of hospitality to any person excluding employees of the assessee is treated as entertainment expenditure. Sec. 37(1) provides for a deduction in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contentions whereas the disallowance of Rs. 2,60,681 is confirmed, the disallowance to the extent of Rs.18,906 shall be considered afresh by the Assessing Officer keeping in view r. 6B. We may place on record that the decisions cited by the learned counsel for the assessee are no longer applicable in view of the retrospective insertion of Expln. 2 to s. 37(2A) of the IT Act, 1961. 7. The next ground of appeal relates to a disallowance of Rs. 15,210 under s. 80VV of the IT Act, 1961. The learned counsel for the assessee contended that a sum of Rs. 13,500 paid to the auditors as retainership fee could not be considered as an expenditure in connection with income-tax proceedings for the purpose of s. 80VV. The Assessing Officer has allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l consideration to the rival contentions. The Assessing Officer has not given any reasons for the disallowance under s. 40 (c) of Rs. 7,134. The CIT(A) deleted a sum of Rs. 4,320 on account of provident fund subscription but has given no reason for sustaining the disallowance of Rs. 2,814. The various High Courts have taken the view that reimbursement of medical expenditure paid to the Managing Director/employees does not amount to perquisite. However, fact remains that the cash payment made to the assessee is a part of the salary paid to him. Under s. 40 (c) any expenditure which results directly or indirectly in the provision of any remuneration or benefit or amenity to a director.... is to be disallowed in case it is found to be excessiv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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