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.39 of 2000 JUDGMENT: (Per LNR,J) This reference is made by the Hyderabad Bench ofthe Income Tax Appellate Tribunal, through its order,dated 25.07.1997 in R.A.Nos.384 to 387/Hyd/1996. Thematter pertains to the assessment years 1985-86, 1986-87 & 1987-88. The following questions are referred foranswer 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.57,818/- and Rs.47,119/- claimed forthe assessment years 1985-86 & 1986-87 was allowableunder Sections 30 & 31 of the I.T.Act and cannot bedisallowed under sec.37(3), (4) & (5) of the I.T.Act? 2.Whether on the facts and in the circumstances of thecase, the ITAT was correct in law in allowing deductionsof Rs.1,02,40,830/-, Rs.60,25,575/- and Rs.67,72,732/-for the asst. years 1985-86, 1986-87 & 1987-88,respectively under Customs 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.57,818/- and Rs.47,119/- towards expenditure claimedfor the assessment years 1985-86 and 1986-87 underSections 30 and 31 of the Income tax Act. The recorddiscloses that the amount was spent towards payment ofsubscription fees to the clubs on behalf of the Directors ofthe Company. By any standard, this does not amount to entertainment expenditure. The Companies Act as wellas the Income Tax Act permit such a facility to theDirectors and the same is treated as part of their businessactivity. We therefore answer the first question against theRevenue. 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.39 of 2000 Date: 23.07.2014