COMMISSIONER OF INCOME TAX Vs. INSTRUMENTATION LIMITED

JUDGEMENT

(1.) ON an application, filed under Section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'), the Tribunal has referred the following questions for our opinion

(2.) THE assessee- company is engaged in the business of manufacturing of process control instrumentation system and sales/installation thereof. THE relevant assessment year is 1988-89. During the course of assessment, the assessing officer noticed that the assessee has claimed deduction of Rs. 97,973 on account of gifts and presents made to the customers. THE assessing officer disallowed the claim of the assessee by invoking the provisions of section 37(2A) of the Act. THE Commissioner (Appeals) has confirmed this disallowance.

(3.) IN the case of CIT v. Ocean Carriers (P) Ltd., 1995) 211 ITR 357, the Bombay High Court has considered the issue whether expenses on maintenance of the guest house are allowable after 28-2-1970 and their Lordships observed as under :