Customer hospitality expenses treated as business outlay where limited to tea, snacks and simple meals under trade custom.

Expenses incurred for tea, snacks and simple meals offered to customers visiting business premises, when provided as ordinary courtesy and in accordance with established trade custom, do not assume the character of entertainment expenditure. On those facts, the expenditure remained a business outlay and the disallowance as entertainment expenses was not justified.

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Issues: Whether the messing expenses incurred for providing tea, snacks and simple meals to customers visiting the assessee's business premises were deductible business or were liable to be treated as entertainment expenditure and disallowed.

Analysis: The expenses were incurred for customers by way of ordinary courtesy and in accordance with the long-standing practice and custom of the trade. Such expenditure, on the facts found, did not assume the character of entertainment expenditure.

Conclusion: The disallowance was not justified and the expenditure could not be treated as entertainment expenses.

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