1991 (4) TMI 45

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..... assessee, in appeal, contended that the distribution of tea samples was done for the purpose of the business. This argument of the assessee was not accepted and, accordingly, the Commissioner of Income-tax (Appeals) confirmed the addition. Counsel for the assessee urged that the assessee was manufacturing tea. Tea was distributed to the shareholders who were present at the annual general meeting. An additional quantity was given as complimentary to directors and friends. The distribution of the samples and complimentary tea was made in the interest of the business. The distribution was made to popularise the tea manufactured by the company and it was done for commercial expediency and, therefore, the expenditure was allowable. The depar .....

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..... e, the addition was not called for at all. Accordingly, the addition is deleted. The Income-tax Officer is directed to modify the assessment of the assessee and its partners." On these facts, the following question of law has been referred to this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in treating the value of stock-in-trade distributed free of cost among the shareholders, directors and their friends attending the annual general meeting as business expenditure of the company and allowing the same ?" In our view, the question which has been raised is misconceived. The assessee in this case did not ask for deduction of any expenditure. What the assessee wanted to say is that the as .....

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..... een laid down in the case of Addl CIT v. Bangalore Turf Club Ltd., [1980] 126 ITR 430 (Kar). In that case, certain refreshments were supplied to the members at the general meeting. There the court held that the expenses were incurred as of necessity and constituted part of the expenses incurred for the holding of the business meetings. Such an expenditure, though incurred for the purpose of serving food, refreshments, drinks including liquor at the business meetings of the members of the managing committee or of ordinary members, would be in the nature of administrative or business expenditure and would have no taint of expenditure in the nature of entertainment, and allowed the same as business expenditure as it was for the purpose of busi .....

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