COMMISSIONER OF INCOME TAX Vs. ASSOCIATED STONE INDUSTRIES

JUDGEMENT

(1.) ON an application under S. 256(1) of the IT Act, 1961, the Tribunal has referred the following question for the opinion of this Court :

(2.) THE assessment years involved are 1977-78 and 1978-79. The return was filed declaring Rs. 27,04,560 in the asst. yr. 1977-78 and Rs. 24,77,520 in the asst. yr. 1978-79. The assessee- company is mainly engaged in excavation of limestone which is sold as 'Kotah Stone'. The assessee owns a number of quarries which were taken on lease from the Government of Rajasthan on royalty basis. During the course of assessment, AO did not allow the weighted deduction under s. 35B(1)(b)(iii) of the IT Act, 1961, was allowable on freight inclusive of transport charges, cartage, collie and B.P.T. charges. Issue in the second question relates to whether Rs. 32,727 should be treated as entertainment expenses and should be disallowed or not.