Banking company's coffee & tea service not entertainment expenditure under Income-tax Act

The High Court of Karnataka held that serving coffee and tea to customers by a banking company during business hours does not amount to entertainment expenditure under the Income-tax Act, 1961. The court ruled in favor of the assessee, stating that such hospitality was a business courtesy and not entertainment. The revenue's appeal was rejected, and no costs were awarded.

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The High Court of Karnataka ruled that the expenditure incurred by a banking company on serving coffee and tea to customers during business hours does not constitute entertainment expenditure under section 37(2B) of the Income-tax Act, 1961. The court held in favor of the assessee, stating that serving coffee and tea was a matter of courtesy and incidental to the business. The revenue's appeal was dismissed, and no costs were awarded.

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