TaxTMI 
TaxTMI 
1985 (6) TMI 71
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....f manufacturers. In connection with the assessee's business, the foreign customers come to India. The assessee had in connection with their visits incurred expenditure by way of club bills amounting to Rs. 26,914 and bills on liquors amounting to Rs. 20,564. The total expense incurred was Rs. 47,478. In the original assessment order, the ITO had disallowed only Rs. 2,011. The rest of the expenditure has been allowed as a deduction. This order was passed on 30-9-1983. 3. The provisions regarding entertainment expenditure had undergone an amendment by the inclusion of Explanation 2 by the Finance Act, 1983. This Explanation stated that entertainment expenditure would include expenditure on provision of hospitality of every kind by the asse....
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....49. We are of the opinion that this Supreme Court decision has no relevance on the point at issue before us. In that case, the ITO had originally passed an order which was clearly inconsistent with the terms of the section as it stood at the time of passing of the order. Later, the section was amended retrospectively. On the retrospective amendment, the order already passed by the ITO was according to the provisions of the Act. Nevertheless, the Commissioner felt that since the order originally passed was inconsistent with the statutory provision as it stood at that time, he passed a revisionary order. The Supreme Court held that since there was a retrospective amendment and the ITO's order became a valid order, there was no scope for passi....
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.... High Court in the case of I.N. Sundresh (HUF) [1983] 141 ITR 669. We are unable to accept this submission either. The ITO has, no doubt, disallowed only Rs. 2,011. It is also no doubt true that on the date on which he passed the order, the retrospective amendment has already come into force. Now, even a cursory reading of the Explanation to section 37(2A) which has retrospective effect, would show that it is quite comprehensive and all sorts of expenditure would be caught within its net. Yet, the ITO had disallowed only Rs. 2,011. This shows that he had either acted in ignorance of the provisions or he had totally misunderstood the provisions. We will first cite the case decided by the Punjab and Haryana High Court in the case of CIT v. Ra....
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....eral reserves. Subsequently, he rectified the assessment order. The High Court held that what was done originally was to accept the increase in the paid-up share capital by taking into account bonus shares issued by capitalising the reserves and losing sight of the fact that by reason of the issue of the said shares the capital has been altered inasmuch as the reserves were reduced by being diverted to the same extent as the issue of bonus shares. This mistake, according to the High Court, can be rectified under the provisions corresponding to section 154. A similar decision has again been given by the Calcutta High Court in the case of CIT v. Mcleod & Co. Ltd. [1982] 134 ITR 674. In that case, the ITO had originally allowed deduction under....
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....that the expenditure on vehicle which was incurred exclusively for the maintenance of the car was correctly allowed after full knowledge of such disclosure and, therefore, it cannot be considered as an error apparent from the records. The case, therefore, turned on its own facts. 10. Shri Namboodri then submitted that even if it is open for the ITO to consider the statutory provisions, rectification is not possible because the application of section 37(2A) cannot be retrospective. This argument need not be elaborately considered in view of the well settled provisions in law that a retrospective amendment has to be the basis for a rectification. He then submitted that the Andhra Pradesh High Court in a number of cases had held that the la....