Food and tea expenses for customers were treated as messing expenses, not entertainment expenses, and remained allowable.

Expenses on food, tea and similar refreshments provided to adatias and customers were treated as messing expenses, not entertainment expenses, under the Income-tax Act. The article states that such expenditure does not fall within the mischief of section 37(2B) and therefore is not disallowable on that ground. It also notes that the contrary view relied on by the Tribunal was rejected. The resulting position is that these expenses were allowable as business expenditure in favour of the assessee and against the Revenue.

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Issues: Whether fooding and tea expenses incurred for adatias and customers constituted entertainment expenses within the meaning of section 37(2B) of the Income-tax Act, 1961 and were therefore disallowable.

Analysis: Expenses incurred on food, tea and similar refreshments for outside constituents and customers were treated as messing expenses and not as entertainment expenses. The ruling followed the view that such expenditure does not fall within the mischief of section 37(2B) and rejected the contrary view that had been relied upon by the Tribunal.

Conclusion: The question was answered in the negative. The expenses were not entertainment expenses under section 37(2B) and were allowable, in favour of the assessee and against the Revenue.

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