1984 (4) TMI 85

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....n 32 of the Act in respect of such assets. The assessee, therefore, filed a writ petition in the Bombay High Court under article 226 of the Constitution of India restraining the ITO from taking into account the retrospective amendment of section 35(2)(iv) for the assessment year under consideration. The High Court by the order dated 17-12-1980 granted injunction as prayed by the assessee. And yet, the ITO while framing the assessment for the year under consideration made an assessment under section 143(3) of the Act by applying the retrospective amendment of section 35(2)(iv). The assessee appealed before the Commissioner (Appeals) against the action of the ITO in this respect. The Commissioner (Appeals) took note of the High Court order an....

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.... foreign customers in the amount of Rs. 6,559, the ITO had accepted that the assessee had incurred this expenditure for promotion of exports, but the ITO had disallowed the item of expenditure of Rs. 6,559 itself The ITO's action was totally incongruous. The Commissioner (Appeals) accepted this argument and allowed the assessee's claim for the expenditure of Rs. 6,559. 5. The revenue is in appeal against the order of the Commissioner (Appeals) in this respect. It was submitted that admittedly the expenditure of Rs. 6,559 was for the purposes of entertainment and the Commissioner (Appeals) could not have allowed it under Explanation 2 to section 37(2). On behalf of the assessee, the same argument as was made before the Commissioner (Appea....

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....e (not being expenditure of the nature described in sections 30 to 36 and section 80VV of the Act and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head 'Profits and gains of business or profession'. [Emphasis supplied]. On a plain perusal of these two sections together, it is clear that when an assessee makes a claim for expenditure, the ITO has to examine the admissibility of the expenditure, first under sections 30 to 36 and section 80VV. If the expenditure does not fall under any of the aforesaid sections, then the ITO has to examine the same unde....