COMMISSIONER, INCOME-TAX Vs. ASHOK KUMAR MANIBHAI PATEL

JUDGEMENT

(1.) THIS Court in ITR No. 104/96, dated 4 -8 -1997 directed the Income -tax Appellate Tribunal, Jabalpur [for short 'the Tribunal'] to submit the statement of case in respect of the following questions: (i) Whether on the facts and in the circumstances of the case the Tribunal was justified in law to cancel the order Under Section 263 dated 173 -1989 ? (ii) Whether on the basis of available materials on records it was legally possible for Tribunal to conclude that the expenditure to the extent of Rs. 1,45,239/ -out of the total expenditure of Rs. 1,60,239/ -claimed as deduction towards messing was incurred by assessee exclusively for providing food and beverabe to its employees ? (iii) Whether the Tribunal was justified in law to hold that in the fact and circumstances of the case, the Commissioner ignored the provisions of explanation 2 to Section 37(2A) of Income -tax Act ?

(2.) THE facts which are essential to be stated are that the assessee is a partnership firm and derived income from manufacture and sale of 'bidis' for the assessment year 1984 -85. The assessee claimed expenditure of Rs. 1,60,239/ -towards messing. The Assessing Officer disallowed the claim of Rs. 10,000/ -vide order dated 8 -71986 and allowed the messing expenses to Rs. 1,50,239/ -.

(3.) BEING dissatisfied with and grieved by the order of the Commissioner passed under Section 263 of the Act the assessee preferred an appeal before the Tribunal. The Tribunal came to hold that the expenditure was incurred for providing the messing facility to the workers by the assessee and as per the language of Section 37(2A) of the Act and such expenditure would not be regarded as entertainment. The Tribunal set aside the order of the Commissioner and upheld the order of the Assessing Officer.