COMMISSIONER OF INCOME TAX Vs. MYSORE MINERALS LIMITED

JUDGEMENT

(1.) THIS is a reference under section 256(2) of the Income-tax Act (for short "the Act"). The Tribunal has referred the following questions for the opinion of this court :

(2.) THE assessee is a public limited company. In the previous year ending on March 31, 1976, corresponding to the assessment year 1976-77, there was a trade delegation from Japan in connection with the business of the assessee-company. During the said visit, the assessee has spent a sum Rs. 32,923. THE said sum included a sum of Rs. 12,875, being the expenses incurred in connection with dinner, tea and travailing expenses in respect of the Japanese delegation. THE company claimed the entire amount as deduction under the head "Business expenditure". THE Income-tax Officer, however, allowed only one-fourth of the amount as "entertainment expenditure" incurred in respect of the employees of the company. THE commissioner (Appeals) has enhanced the allowance to 50%. THE Tribunal has agreed with that view.

(3.) THE Commissioner found that 50% of the expenditure incurred by the company might be allocated towards the expenses incurred by the company on the employees who had accompanied the Japanese delegation and who partook in the entertainment. That is a discretion which, in our opinion, cannot be said to be arbitrary. THEre is no material to show that anything less than that amount could have been allocated. We, therefore, answer the first question in the affirmative and against the Revenue.