COMMISSIONER OF INCOME TAX Vs. NAVALMAL PUNAMCHAND

JUDGEMENT

(1.) BY this reference under Section 256(1) of the I.T. Act, 1961, hereinafter referred to as "the Act", the Income-tax Appellate Tribunal, Indore Bench, has referred the following question of law to this court for its opinion:

(2.) THE material facts giving rise to this reference briefly are as follows : THE assessee derives income from business in cloth. In the assessment years 1972-73 and 1973-74, the assessee claimed deduction of the messing expenses on the ground that, in accordance with the custom of the trade, the assessee had to provide meals to its upcountry customers. THE claim was disallowed by the ITO on the ground that the expenditure was for entertainment within the meaning of Section 37(2B) of the Act. On appeal, the AAC did not uphold the view of the ITO that the expenses were not allowable under the provisions of Section 37(2B) of the Act. THE AAC partly allowed the expenses claimed by the assessee. Aggrieved by the order of the AAC, the revenue preferred an appeal before the Tribunal. THE Tribunal upheld the finding of the AAC and dismissed the appeal. Aggrieved by the order passed by the Tribunal, the revenue submitted an application for making a reference and it is at the instance of the revenue that the aforesaid question of law has been referred to this court for its opinion.