1986 (9) TMI 47

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..... e in the nature of entertainment expenditure within the meaning of section 37(2B) of the Income-tax Act, 1961 and is allowable as deduction in computing the total income for assessment year 1973-74. ? " Brief facts of the case are that the Income-tax Officer by order dated March 3, 1975, held the two items of Rs. 5,231 and Rs. 2,383 as disallowable items. The assessee filed an appeal before the Appellate Assistant Commissioner of Income-tax, Jaipur Range. As regards the item of Rs. 5,231, the Appellate Assistant Commissioner held that the said amount was claimed as kitchen expenses. Learned counsel for the assessee had argued before the Appellate Assistant Commissioner that the kitchen was being run for customers who came to purchase good .....

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..... f expenditure had been designated as " mehmani " which means entertainment of customers and others. The Appellate Assistant Commissioner as such held that the order passed by the Income-tax Officer in this regard was also correct. The assessee, aggrieved against the order of the Appellate Assistant Commissioner, filed a second appeal before the Income-tax Appellate Tribunal. Learned Tribunal in its order dated November 9, 1976, held that the assessee had to maintain the kitchen for the convenience of the customers. These expenses had been actuated by business needs. The expenses of Rs. 5,231 cannot partake of the nature of entertainment expenses. The appeal of the assessee in respect of Rs. 5,231 was allowed and the orders of the Income-t .....

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..... usiness expenses. The Tribunal did not make any mention of any evidence to show that such amount was at all spent by the assessee even for entertainment expenditure or otherwise. The Tribunal as such committed a serious error of law in setting aside the order of the Appellate Assistant Commissioner without any material or evidence on record. In the facts and circumstances of this case, there was no material on record to hold as was done by the Tribunal that the amount of Rs. 5,231 was incurred on maintaining a kitchen for providing meals to its trade constituents. Now, so far as the item of Rs. 2,383 is concerned, the Appellate Assistant Commissioner has upheld the order of the Income-tax Officer simply on the ground that such item was sh .....

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