Berger Paints India Ltd v. Cit[[1]].Therefore, Thesecond Question Is Answered Against The Revenue

THE HON’BLE SRI JUSTICE L.NARASIMHA REDDYANDTHE HON’BLE SRI JUSTICE CHALLA KODANDARAMR.C.No.52 of 2002JUDGMENT: (Per LNR,J) This reference is made by the Hyderabad Bench ofthe Income Tax Appellate Tribunal, through its order,dated 28.06.2002 in R.A.No.388/Hyd/1996. The matterpertains to the assessment year 1986-87. The followingquestions are referred for answer to this Court: 1.Whether on the facts and in the circumstances of thecase, the ITAT was correct in law in holding that theexpenditure of Rs.47,119/- claimed for the assessmentyear 1986-87 was allowable under Sections 30 & 31 ofthe I.T.Act and cannot be disallowed under sec.37(3), (4)& (5) of the I.T.Act? 2.Whether on the facts and in the circumstances of the case, the ITAT was correct in law in allowing deductionof Rs.60,25,575 for the asst. year 1986-87 underCustoms Duty u/s 43B of the I.T.Act? Hard Sri J.V.Prasad, learned counsel for theapplicant and Sri A.V.Raghuram, learned counsel for therespondent. The first question is about allowing a sum ofRs.47,119/- towards expenditure claimed for theassessment year 1986-87 under Sections 30 and 31 ofthe Income tax Act. The record discloses that the amountwas spent towards payment of subscription fees to theclubs on behalf of the Directors of the Company. By anystandard, this does not amount to entertainmentexpenditure. The Companies Act as well as the IncomeTax Act permit such a facility to the Directors and the same is treated as part of their business activity. Wetherefore answer the first question against the Revenue. In all fairness, learned Standing Counsel for theDepartment submitted that the second question iscovered by the judgment of the Hon’ble Supreme Court in Berger Paints India Ltd. vs. CIT[[1]].Therefore, thesecond question is answered against the Revenue. ____________________ L.NARASIMHA REDDY, J ______________________ CHALLA KODANDA RAM, J Date: 23.07.2014JSU THE HON’BLE SRI JUSTICE L.NARASIMHA REDDYANDTHE HON’BLE SRI JUSTICE CHALLA KODANDA RAM JSU [1]266 ITR 99(SC) R.C.No.52 of 2002 Date: 23.07.2014