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TMI Blog2002 (10) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... – Thus Tribunal has committed an error in holding that the expenditure on presents at the time of Diwali is not in the nature of expenditure on entertainment - - - - - Dated:- 17-10-2002 - Judge(s) : Y. R. MEENA., SHASHI KANT SHARMA. JUDGMENT On an application under section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following questions for our opinion: RA No. 921JP of 1998: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of Rs. 1,94,775 by holding that giving gifts and presents does not amount to hospitality and cannot be considered for disallowance as entertainment expenditure? 2. Whether, on the facts and in the circumstances of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of Explanation 2 to sub-section (2A) of section 37, the Assessing Officer disallowed Rs. 1,94,775 on account of expenditure on gifts and presents and Rs. 1,89,867 disallowed invoking the same provision in the assessment year 1990-91. The Assessing Officer further noticed that the assessee has claimed the expenses on gifts and presents, such as fruits, sweets, dry fruits. The Assessing Officer was of the view that these expenses are in the nature of entertainment expenses and after insertion of Explanation 2 to sub-section (2A) of section 37, part of such expenses are not allowable and he made the aforesaid additions in both the years. In appeal before the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax (Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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, but does not include expenditure on food or beverages provided by the assessee to his employees in office, factory or other place of their work" While defining the scope of entertainment expenditure by the aforesaid Explanation 2, the Legislature has widened the meaning and scope of the words "entertainment expenditure" and now entertainment expenditure includes expenditure on providing food or beverages or in any other manner whatsoever to any person. Even if gifts and presents ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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