TaxTMI 
TaxTMI 
TaxTMI 
1996 (7) TMI 93
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....he Income-tax Act, 1961, the Appellate Tribunal was right in holding that the assessee should be treated as a company in which the public are substantially interested ? (ii) " Whether the Appellate Tribunal's view that since the assessee is a public company under section 43A of the Companies Act, 1956, the assessee should be treated as a company in which the public are substantially interested under section 2(18)(b) of the Income-tax Act, 1961, is sustainable in law ? (iii) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the weighted deduction under section 35B should be allowed at 1 1/2 times and not at 1 1/3rd times as allowed by the Income-tax Officer ? Assessment year 1979-....
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....oned in section 2(18)(b)(B) of the Income-tax Act. The Income-tax Officer held that the first condition to be satisfied was that the company was not a private company as defined in section 3(1)(iii) of the Companies Act, 1956, and the essential ingredients being present in the articles of association, the assessee-company was a private company. According to the Income-tax Officer, when once the prior condition under section 2(18)(b) of the Act was not satisfied, it was needless to look into the question whether all the other conditions mentioned in section 2(18)(b)(B) of the Act were satisfied at all. Therefore, the Income-tax Officer has adopted the status of the assessee as a company in which the public were not substantially interested a....
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....was held by three companies of the Sundaram group, held that the assessee-company was one in which the public were substantially interested. Consequently, he directed the Inspecting Assistant Commissioner to make necessary changes by treating the assessee as a company in which the public are substantially interested. He has also deleted the disallowance of Rs. 2,09,269 holding that it is not an entertainment expenditure. On appeal by the Revenue, the Tribunal upheld the orders of the Commissioner of Income-tax (Appeals) as his decision was in accordance with the decisions of the Tribunal in the assessee's own case for the assessment years 1970-71, 1973-74, 1976-77 and 1977-78 and also in accordance with the decisions of the Madras High Cou....
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....herefore, the assessee is entitled to weighted deduction under section 35B of the Act at the rate of 1 1/2 per cent. In that view of the matter, we answer the first three questions preferred in the assessment year 1979-80 and all the questions relating to the assessment year 1975-76 in the negative and in favour of the Department. So far as the fourth question is concerned, it relates to the assessment year 1979-80. The point for consideration is whether the entertainment expenditure of Rs. 2,09,269 is allowable as deduction under section 37(2A) of the Income-tax Act, 1961. The Income-tax Officer disallowed a sum of Rs. 2,09,269 under the provisions of section 37(2A) of the Act. The details of the expenditure are as under : Rs. Guest a....
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...., therefore, are not strictly in the nature of advertisement expenditure and would qualify as deduction in view of the decision of the Madras High Court in the case of CIT v. Karuppuswamy Nadar and Sons [1979] 120 ITR 140. In the result, the entire expenditure of Rs. 2,09,269 disallowed by the Inspecting Assistant Commissioner was allowed as deduction by the Commissioner of Income-tax. On appeal, the Appellate Tribunal confirmed the order passed by the Commissioner of Income-tax. Before us, learned counsel appearing for the assessee submitted that the incidental expenditure like tips, etc., and the photos will not come under the category of entertainment expenditure, because these expenditures were incurred for sales promotion. According t....