1993 (9) TMI 16

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..... convenience, to this court for opinion : " (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the entertainment expenditure of Rs. 34,141, incurred outside India, was not an allowable revenue deduction in its entirety in computing the total income of the company and in restricting the same to the limits specified in sub-section (2A) of section 37 of the Income-tax Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that no appeal lies against levy of interest under section 215 of the Income-tax Act, 1961 ? (3) Whether, on the facts and in the circumstances of, the case, the Tribunal was right in law in holding that reimbursement .....

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..... Rs. 34,141 being in the nature of entertainment expenditure outside India. The question before the court is as to whether the allowability of the said expenditure is subject to ceiling prescribed by section 37(2A) of the Act. For the purpose of deciding this question, it is necessary to notice the relevant provisions of the Act as they stood at the relevant time. Section 37(2A) of the Act provides that notwithstanding anything contained in sub-section (1) or sub-section (2), no allowance shall be made in respect of so much of the expenditure in the nature of entertainment expenditure incurred by any assessee during any previous year which expires after the 30th day of September, 1967, as is in excess of the amount computed thereunder. By .....

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..... 2A) of the Act became inoperative for all purposes after section 37(2B) of the Act was inserted in the Act and entertainment expenditure incurred outside India can be allowed without reference to ceiling imposed by section 37(2A) of the Act. There is no merit in this submission. Section 37(2A) of the Act operates notwithstanding anything contained in sub-section (1) of section 37 of the Act. If an assessee claims the benefit of section 37(1), such allowance can be made only subject to section 37(2A) of the Act. We agree with the reasoning and conclusion of the Tribunal on this aspect. In view of the above discussion, we answer question No. 1 in the affirmative, i.e., in favour of the Revenue and against the assessee. Having regard to th .....

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