Estimate-based disallowance of refreshments expenditure held to raise no question of law under tax reference provisions.

A Tribunal's estimate-based apportionment of claimed refreshments expenditure as partly disallowable entertainment expenditure did not, on these facts, give rise to a question of law under section 256(2) of the Income-tax Act, 1961. The High Court held that where supporting particulars were lacking, the Tribunal was entitled to adopt a practical rough-and-ready estimate; the possibility of a different estimate did not convert that factual assessment into a legal issue. The Court also noted that a fuller disallowance might have been possible, but that did not alter the character of the Tribunal's factual approach. The reference application therefore failed.

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Issues: Whether the Tribunal's estimate-based treatment of alleged entertainment expenditure on refreshments furnished a question of law warranting reference under section 256(2) of the Income-tax Act, 1961.

Analysis: The expenditure related to refreshments claimed to have been provided to customers, but the necessary details were not available before the taxing authorities. The Tribunal adopted a practical estimate and treated only part of the expenditure as disallowable entertainment expenditure. The Court held that although a different estimate might have been possible, the adoption of a rough and ready method in such matters did not, by itself, give rise to a question of law. The Court further observed that the entire amount could have been disallowed on the basis of lack of supporting particulars, but that possibility did not convert the Tribunal's factual approach into a legal question.

Conclusion: No question of law arose from the Tribunal's estimate-based apportionment of the expenditure, and the application failed.

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