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TMI Blog1980 (7) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... ears are 1968-69,1969-70 and 1970-71. During the previous years, relevant to the assessment years, the assessee incurred expenditure under the head " Refreshments The total expenditure for the three years are as follows : --------------------------------------------------------------------------------------------------------------------------------------------------- Sl. No. Assessment year Amount --------------------------------------------------------------------------------------------------------------------------------------------------- Rs. 1. 1968-69 59,780 2. 1969-70 69,035 3. 1970-71 1,40,278 --------------------------------------------------------------------------------------------------------------------------------------------------- The break-up of the expenditure was also furnished. The figures included expenditure incurred for the supply of refreshments, lunch, liquors, etc., in the business meetings of the stewards, members of the managing committee as also of the general body. The assessee claimed deduction of the entire expenditure mentioned above. The ITO, however, was of the opinion that the entire expenditure was in the nature of entert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sri Rajasekhara Murthy, learned counsel for the revenue, contended that as the expenses in question were admittedly incurred for purposes of providing refreshments, lunch, liquor, etc., the Tribunal was wrong in holding that these expenses were not in the nature of entertainment expenditure and consequently in allowing the deductions of the said amounts under s. 37(1) of the Act. In support of his submission, he relied on the following decisions : (i) Brij Raman Dass Sons v. CIT [1976] 104 ITR 541 (All). In this case the assessee was a dealer in Banarasi goods. In its returns, the assessee claimed deduction of expenditure incurred towards serving tea, lassi and jalapan to its customers. The Allahabad High Court held that the expenses were in the nature of entertainment expenditure and, therefore, deduction would have to be limited to the extent as provided in s. 37(2A) of the Act. (ii) CIT v. Veeriah Reddiar [1977] 106 ITR 610 (Ker) [FB]. The assessee in this case was a dealer in piece-goods. He had expended amounts towards supply of cigarettes, coffee and meals to his customers. The Full Bench of the Kerala High Court held, agreeing with the Allahabad High Court in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not constitute entertainment expenditure. (v) CIT v. Karuppuswamy Nadar Sons [1979] 120 ITR140 (Mad). The assessee in this case was a wholesale cloth merchant. It had incurred expenses towards supplying tea and coffee to its customers. The Madras High Court made a distinction between hospitality and entertainment and held that the expenditure was only in the nature of hospitality, but was not in the nature of entertainment expenditure. (vi) CIT v. Mysore Paper Mills Ltd. (C.P. No. 124 of 1975-5-4-1976) In this case, a Division Bench of this court rejected the prayer of the revenue for directing the Income-tax Appellate Tribunal to refer the question as to whether the Tribunal was right in holding that the expenditure incurred by the Mysore Paper Mills in providing refreshments to its shareholders at the general body meetings was not in the nature of entertainment expenditure, for the opinion of this court. Relying on these decisions, learned counsel for the assessee submitted that the view taken by the Tribunal on the question was correct and the question should be answered in favour of the assessee. In the present case, we are not concerned with any expenditure in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-s. (2A) of 37 of the Act is attracted, the expenditure must bear the character of " entertainment expenditure,". The next point for consideration is what is meant by " expenditure in the nature of entertainment ". This depends upon the meaning of the word " entertainment ". The word " entertainment " not having been defined, that meaning, which is most appropriate in the context in which it is used, should be given. The meaning of the words " entertain " and " entertainment " is given in Webster's Third New International Dictionary at p. 757. In our view, out of the various shades of meanings of the words given therein, the meanings which are relevant in the context of s. 37(2A) of the Act are- "' Entertain'-...To give reception to (a person); to show hospitality to; to provide for the needs of a guest; to cause time to pass pleasantly for (some one); amuse; to provide entertainment esp. for guests. 'Entertainment'.-The act of entertaining; the act of receiving as guest; hospitable reception; the act of diverting, amusement or causing someone's time to pass agreeably; amusement; something that diverts, amuses, or occupies the attention agreeably; provide for guests whim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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