1990 (12) TMI 139

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.... 35,713 8,950 - 750 2,558 2. Sh. D.B. Nagpal 20,087 4,800 - - 784 3. S.K. Das 7,9993 7,800 3,600 1,772 21,055 4. R.K. Sahni 8,3664 - 3,600 1,399 23,664 . Total disallowance . . . . 48,061 2. Before the CIT(A) the disallowance of Rs. 2558 in the case of Sri H.L. Gulati and Rs. 784 in the case of Shri D.B. Nagpal only was contested. In the case of Shri Gulati a sum of Rs. 8,950 was the rent paid for the accommodation provided to him free of cost. Similarly in the case of Mr. Nagpal, a sum of Rs. 4,800 was paid for the accommodation provided free to him by the assessee. The Assessing Officer allowed the deduction to the extent of 1/5th of the s....

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....me High Court in the case of CIT vs. Ashoka Marketing Ltd. (1990) 88 CTR (Cal) 182 : (1990) 181 ITR 493 (Cal) has held that where the actual expenditure is known there is no need to take resort to r. 3 of the IT Rules. This view has again been affirmed by the same High Court in the case of the CIT vs. Shree Krishana Gyanoday Sugar Ltd. (1990) 186 ITR 541 (Cal). The Full Bench of the Kerala High Court in the case of CIT vs. Forbes, Ewart & Figgis (P) Ltd. (1981) 24 CTR (Ker) 87 (FB) (1982) : (1980) 138 ITR 1(Ker) (FB) has also taken the same view. The Madras High Court in the case of CIT vs. P.R. Ramakrishana (1980) 18 CTR (Mad) 52 : (1980) 124 ITR 545 (Mad) repelled the contention of the Revenue that in the case of company disallowance unde....

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....ny case a sum of Rs.18,906 incurred on account of gifts, etc., could not be treated as entertainment expenses. Learned Deptl. Representative supported the order of the Revenue authorities. 6. We have given our careful consideration to the rival contentions. We find that the assessee in its note to the CIT(A) has admitted that the expenses represent mainly the cost of tea, cold drinks, meals, etc., provided to customers. In view of the retrospective amendment to s. 37(2A), the expenditure incurred on providing any kind of hospitality to any person excluding employees of the assessee is treated as entertainment expenditure. Sec. 37(1) provides for a deduction in respect of expenditure incurred or laid out for the purpose of business. Sec. ....

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....the learned counsel for the assessee are no longer applicable in view of the retrospective insertion of Expln. 2 to s. 37(2A) of the IT Act, 1961. 7. The next ground of appeal relates to a disallowance of Rs. 15,210 under s. 80VV of the IT Act, 1961. The learned counsel for the assessee contended that a sum of Rs. 13,500 paid to the auditors as retainership fee could not be considered as an expenditure in connection with income-tax proceedings for the purpose of s. 80VV. The Assessing Officer has allowed a sum of Rs. 5,000 out of the total expenditure of Rs. 24,460 whereas the CIT(A) has considered 50 per cent of the retainership fee towards income-tax proceedings as allowable. We find that a sum of Rs. 13,500 has been paid to the audito....