COMMISSIONER OF INCOME TAX Vs. INDIAN OVERSEAS BANK

JUDGEMENT

(1.) IN compliance with the direction given by this Court in Tax Case No. 120 of 1980 the Tribunal referred the following two questions for the opinion of this Court under s. 256(2) of the IT Act, 1961 :

(2.) WHETHER, on the facts and in the circumstances of the case, that part of the entertainment expenditure which are admissible as a deduction under s. 20 should not be taken into consideration for allowance of entertainment expenditure while applying the provisions of s. 37(2B) for the asst. yr. 1970-71 ?"

(3.) THE fact remains that with regard to the allowance of entertainment expenditure, the assessee has not raised any ground before the AAC. Even in the original ground filed before the Tribunal such a ground was not taken. THE assessee filed a petition to admit additional ground for allowance of entertainment expenditure. THE Tribunal admitted the additional ground since allowing the entertainment expenditure is part of adjustment of tax liabilities of the assessee. THErefore, it cannot be said that the Tribunal was incorrect in admitting the additional ground. However, without any orders by the authorities below on this aspect, it may not be possible for the Tribunal to render any decision on this aspect. Under such circumstances, this matter was remitted back to the ITO for the purpose of disposing of the same for fresh disposal in accordance with law. Now there is also a decision of the Supreme Court in the matter of allowing expenditure under s. 37(2B) of the Act as reported in the case of CIT vs. Patel Bros. . THErefore, there is no infirmity in the order passed by the Tribunal remitting back this issue for fresh disposal. Accordingly, we answer question No. 1 in the affirmative and against the Department.