1982 (1) TMI 78

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... Hariyana High Court in the case of CIT vs. Gheru Lal Bal Chand 1977 CTR (P&H) 150: (1978) 111 ITR 134 (P&H), he realised that an error had occurred in allowing the assessee Rasoi expenses amounting to Rs. 11,692. According to the aforesaid decision, the amount incurred on Rasoi Expenses, being entertainment expenses, were not saved on the ground that the expenditure was under taken to extend customary hospitality. He therefore caused a notice u/s 154, to be served on the assessee. This notice was dated 19th August 1980 which was served on the assessee on 21st August 1980. The notice called upon the assessee to show cause as to why the error apparent from the record in the assessment order should not be corrected regarding the allowance mad....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....he CIT (Appeals). That the issue regarding the allowance for expenditure incurred on providing food and refreshment by a businessman to his constituents was not considered to be entertainment expenditure by their Lordships of the Gujarat and Madras High Courts. No doubt, the Punjab and Haryana High Court had held this expenditure to be entertainment expenditure and, therefore, further held that, being entertainment expenditure, was not to be allowed as business expenditure. Since there was a divergence of views, withdrawal of allowance under the guise of rectification u/s 154 was an error committed by the ITO. He referred to the decision of their Lordships in vs. R. Sonti vs CIT, West Bengal (1979) 117 ITR 838 (Cal), where their Lordships h....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ervations of their Lordships, it was submitted by the Deptl, Rep. That the issue regarding the allowability or otherwise or expenditure incurred by a businessman for providing food and refreshment to his constituents was no longer an open issue as far as the State of Punjab is concerned. All the authorities are bound to follow the rule of law laid down by their Lordships in the decision of Gheru Lal Bal Chand. Therefore, the contentions of the assessee were misconceived that they claimed that the issue was debatable one. 3. Having heard the rival contention, we are inclined to find force in the submission made on behalf of the assessee. The issue regarding the or otherwise of expenditure incurred over the supply of food and refreshment b....