Trade custom in business expenditure prevents classification as entertainment expense, so no referable question of law arose.

Expenditure incurred for a film centenary celebration was treated as business expenditure because it was found to be in line with established trade custom and directed to promoting business image and future income. The Tribunal relied on binding Bombay HC precedent that expenses incurred pursuant to an established business custom do not constitute entertainment expenditure under the disallowance provision. As no material showed that this jurisdictional view had been overruled or displaced, the dispute did not give rise to a referable question of law, and reference was refused.

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Issues: Whether any referable question of law arose from the Tribunal's order allowing expenditure of Rs. 51,000 incurred for the centenary celebration of a film, in view of the disallowance provision relating to entertainment expenditure.

Analysis: The allowance of the expenditure rested on the Tribunal's view that the celebration expense was incurred in accordance with an established trade custom in the film business and was aimed at promoting the business image and future income. That approach was supported by binding Bombay High Court precedent holding that expenses incurred in connection with an established custom or trade practice of business do not amount to entertainment within the meaning of the relevant provision. In the absence of any material showing that this jurisdictional view had been overruled or displaced, and in light of the settled position within the jurisdiction, the dispute did not raise a question fit for reference.

Conclusion: No referable question of law arose, and the application for reference was rejected.

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