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TMI Blog1970 (12) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... lity of the entertainment allowance or any portion thereof received by the assessee ? " The assessee, the late Shri Prem Nath, now represented by his legal representatives, was getting a salary as governing director from Messrs. Prem Nath Motors (P.) Ltd. For the assessment year 1957-58, the assessee filed his return of income in which he included a sum of Rs. 7,000 as being his receipt from the said company by way of entertainment allowance. There is no dispute that the assessee had not been receiving such an allowance from his present employer from before the 1st April, 1955. The Income-tax Officer held that the actual incurring of expenses over entertainment had not been proved and, therefore, the claim was not allowable. The Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought about the following two changes in this position. Firstly, it took out an allowance in the nature of an entertainment allowance from section 4(3)(vi) by rewording the said section as follows : " Any special allowance or benefit, not being in the nature of an entertainment allowance or other perquisite within the meaning of sub-section (1) of section 7, specifically granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit, to the extent to which such expenses are actually incurred for that purpose. " Simultaneously the Finance Act, 1955, substituted a new section 7 in place of the old one in the Income-tax Act, 1922, to deal with income accruing by way of salari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusion was limited to the extent to which such special allowance was actually spent for the purpose of the performance of the duties of an office. Only entertainment allowance was specifically excluded from section 4(3)(vi) when it was amended by the Finance Act of 1955. If the legislature had intended that the assessee should continue to be entitled even after April 1, 1955, to the exclusion of the entertainment allowance from his total income and that too without any limit on its quantum and that the said allowance must be actually spent in the performance of the duties of an office, then there was no need for the amendment of section 4(3)(vi) at all. The legislature would have allowed the entertainment allowance to be continued to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inment allowances granted by their employers to the assessees after 1st April, 1955, would not qualify for such deduction from salaries of such assessees. Further, even when the entertainment allowance was being received by an assessee from before 1st April, 1955, it was made to be deductible only to the extent of one-fifth of the salary of the assessee or to the extent of Rs. 7,500, whichever is less, from the salary of an assessee. Both the entitlement to deduction and the extent of the deduction of an entertainment allowance were thus restricted under section 7(2)(iii) in contrast with the other special allowances to be excluded from the total income of the assessee under section 4(3)(vi). In the light of the above legislative. history ..... X X X X Extracts X X X X X X X X Extracts X X X X
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