1996 (3) TMI 18

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....ribunal referred the following question of law for the opinion of this court under section 256(1) of the Income-tax Act, 1961 : "Whether the Tribunal's finding that the sum of Rs. 23,350 being the expenditure incurred towards supply of soft drinks to the customers cannot be treated as entertainment expenditure and disallowed under section 37(2A) of the Income-tax Act, 1961, is sustainable in law ....

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....rtment relied upon the amendment introduced by the Finance Act, 1983, with retrospective effect from April 1, 1976, by way of Explanation 2 to section 37(2A) expressly prohibiting allowance of entertainment expenditure incurred for customers. It means if the expenditure is incurred for its own employees such an expenditure would not come within the purview of Explanation 2 to section 37(2A). There....

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....ned counsel, when the soft drinks were served to the customers at branches the employees of the company were also entertained and, therefore, a portion of the expenditure is relatable to the entertainment expenditure, incurred to its employees, which is not lavish in nature. But, according to the facts arising in this case, the assessee claimed a sum of Rs. 23,350 being the expenditure incurred to....