2010 (4) TMI 291

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....evenue has sought to raise the following substantial questions of law:- "1. Whether on the facts and circumstances of the case, the ITAT was right in law in holding that the expenditure incurred on presentation of articles did not contain logo of the assessee and was not meant for advertisement but for the business promotion in general and hence not disallowable under Rule 6B? 2. Whether on the facts and circumstances of the case, the ITAT was right in holding that the amount on account of rent paid to PSICC was allowable under Section 30 of the Income Tax Act, 1961 and provisions of Section 37(1) and 37(4) were not attracted in this case? 3. Whether on the facts and circumstances of the case, the ITAT was right in allowing 50% as entert....

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....ly, while following the same reasoning and keeping in view the consistency, we answer question No. 2 in favour of the appellant-revenue and against the respondent-assessee in this appeal as well. Re: Question No. 3 5. The last question for adjudication is whether 50% of expenses under the head 'entertainment expenses' has been rightly allowed by the Tribunal. A perusal of the order passed by the Tribunal shows that it has upheld the order dated 15.11.1994, passed by the CIT(A) by adding that the expenses were allowable as deduction in terms of the explanation to Section 37(2A). It would be appropriate to examine the explanation enumerating the expression 'entertainment expenditure', which reads as under:- "Explanation. - For the purposes....

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....earlier years in the case of the assessee-respondent, 50% of expenses were allowed under Section 37(2A) by the Tribunal in I.T.A. No. 1304/Chandi/1988, decided on 15.3.1994, in respect of assessment year 1981-82. Accordingly, the Assessing Officer was directed to allow 50% of the amount of Rs. 1,97,177/- as entertainment expenses. On further appeal of the revenue, the Tribunal has affirmed the order passed by the CIT(A). 7. Having heard learned counsel for the parties we are of the considered view that the matter is no longer res integra and has been answered by Hon'ble the Supreme Court in the case of Prakash Cotton Mills Pvt. Ltd. v. Commissioner of Income Tax (Central) Bombay, (1993) 3 SCC 452. It has been held that which portion of the....