TaxTMI 
TaxTMI 
2006 (8) TMI 151
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.... facts and circumstances of the case, the hon'ble Income-tax Appellate Tribunal was justified in deleting the disallowance of Rs. 90,883 made on account of disallowance out of festival expenses incurred by the assessee ? (ii) Whether on the facts and circumstances of the case, the hon'ble Income-tax Appellate Tribunal was justified in law in deleting the disallowance of Rs. 55,24,250 made on account of interest on interest free advances given to sister concern for non-business purposes ? (iii) Whether on the facts and circumstances of the case, the hon'ble Income-tax Appellate Tribunal was justified in law in deleting the additions relating to disallowance of Rs. 1,28,16,194 claimed by the assessee on account of sales tax ....
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....es of the orders passed for the assessment year 1991-92 were placed on record. However, on the asking of the court copies thereof were made available. The relevant findings in the order passed by the Tribunal in I.T.A. No. 225/Chandigarh/95, decided on July 25, 2001 for the assessment year 1991-92 are as under : "5.1 We have considered the rival submissions. The Assessing Officer while examining the accounts found that the assessee had spent an amount of Rs. 2,51,964 on account of shawls/ wrist watches, etc., claimed to be given to the staff members and other represent actives of the bulk buyers of the company' s products on the occasion of Diwali. The Assessing Officer held that these are not distributed in the ordinary course....
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....ich for the relevant assessment year reads as under : " 37. (2) Notwithstanding anything contained in sub-section (1), any expenditure in the nature of entertainment expenditure incurred by any assessee during any previous year commencing on or after the 1st day of April, 1992, shall be allowed as follows :- (a) where the amount of such expenditure does not exceed ten thousand rupees, the whole of such amount ; (b) in any other case, ten thousand rupees as increased by a sum equal to fifty per cent. of such expenditure in excess of ten thousand rupees. Explanation.-For the purposes of this sub-section, ' entertainment expenditure' includes- (i) the amount of any allowance in the nature of....
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....s or in any manner whatsoever and whether or not such provision is made by reason of any express or implied contract or custom or usage of trade. 7. The term "entertainment" has been defined in Webster' s Encyclopedic Unabridged Dictionary edition of 1989 as : "1. the act of entertaining ; agreeable occupation for the mind ; diversion ; amusement ; solving the daily crossword puzzle is an entertainment for many. 2. Something affording diversion or amusement, esp. an exhibition or performance of some kind ; the High light of the ball was an elaborate entertainment ; 3. hospitable provision for the wants of guests. The word ' entertaining' is defined as : "affording entertainment ; amusing....
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....hread' s case [2002] 258 ITR 511 and Instrumentation Ltd.' s cases [2002] 258 ITR 513 and endorse the view taken by the Calcutta High Court in Shalimar Industries' case [1995] 78 Taxman 521 and hold that the expenditure of distribution of gifts on festival cannot be termed to be entertainment. However, it would be a question of fact to be pleaded and substantiated before the Assessing Officer that the kind of expenditure incurred on distribution of gifts was justified keeping in view the nature of business, turnover and other related factors. We have examined the facts of the present case and keeping in view the nature of business, scale thereof, the amount of expenditure claimed on account of purchase of articles for distrib....
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....e interest-free advance given to its sister concerns for non-business purposes and accordingly, disallowed interest of Rs. 55,24,250 on that. Details of interest-free advances made to various sister concerns form part of the assessment order as annexure thereto, which shows that in the case of sister concerns namely, M/s. Ganpati International Ltd. the debit closing balance was Rs. 17,89,868.68, in the case of M/s. Pashupati Enterprises Pvt. Ltd. the closing debit balance was Rs. 1,19,83,188, in the case of M/s. Varinder Agro Packs Ltd. the debit closing balance was Rs. 88,55,000, and in the case of M/s. Pashupati Enterprises Ltd. the closing debit balance was Rs. 42,29,750. As we have already held in Abhishek Industries' case [2006] 28....