Fooding expense deduction depends on whether meals were for constituents or employee upkeep under the entertainment expense restriction.

Expenditure on fooding was analysed by splitting the claim between meals supplied to constituents and meals provided to low-paid employees who stayed at the shop during the day. Only the portion attributable to constituents was treated as entertainment expenditure and brought within the restriction under section 37A of the Income-tax Act. The balance, being incurred for the upkeep of employees, was accepted as business expenditure and not disallowed on that ground. The claim was therefore allowed only to the extent of the employee-related and otherwise permissible expenditure, while the constituent-related amount was disallowed.

---

---

Issues: Whether the assessee's claim for deduction of fooding expenses was allowable in full or only to the extent attributable to meals supplied to employees.

Analysis: The assessee incurred the expenditure partly for providing meals to constituents and partly for feeding employees whose salaries were low and who stayed at the shop throughout the day. On the facts found, only the amount spent on meals supplied to constituents fell within the category of entertainment expenses. The balance was treated as business expenditure paid for the upkeep of employees and was not hit by the entertainment-expenses restriction under section 37A of the Income-tax Act.

Conclusion: The claim was allowable only to the extent of Rs. 1,761, while Rs. 500 was disallowed.

---