Prakash Krishna, J. - (1.) THIS is a reference under s. 256(2) of the IT Act. The following question of law has been referred to this Court for its opinion :- "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the provisions of s. 37(2B) were applicable to the expenses of Rs. 7,959 incurred by the assessee ?"
(2.) THE ITO while making the assessment for the assessment year 1972-73 disallowed the entertainment expenses being not admissible under s. 37(2B) of the IT Act. This order was affirmed upto the stage of Tribunal. THE Tribunal in para 12 of its order has observed that the disallowance of Rs. 7,959 by the ITO is legally correct in view of the decision of the Allahabad High Court in the case of Brij Raman Doss and Sons vs. .CIT 1975 CTR (All) 223 : (1976) 104 ITR 541 (All). THE aforesaid judgment has been disapproved by the Supreme Court in the case of CIT vs. Patel Bros. and Co. Ltd. (1995) 126 CTR (SC) 132 : (1995) 215 ITR 165 (SC). THE Supreme Court has held that entertainment expenditure is allowable expenditure. In view of the aforesaid pronouncement by the Supreme Court, we answer the above question in the negative, that is in favour of the assessee and against the Department.;