- (1.) ON an application under S. 256(1) of the IT Act, 1961, the Tribunal has referred the following question for our opinion : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the CIT was wrong in directing the AO under S. 263 of the Act to invoke the provision of S. 37(3A) of the IT Act in respect of the expenditure on calendars, Panchang and diaries ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the expenditure on calendars, Panchang and diaries should be regulated only under s. 37(3A) of the IT Act, 1961, and in that view directing the AO to ascertain the cost of each articles in tender for prescription and regulates the expenditure in accordance with r. 6B ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the payment made to hotels remaining balance after disallowance under S. 37(3A) cannot be further disallowed under S. 37(3A) cannot be further disallowed under S. 37(2A) of the IT Act as entertainment expenditure ?"
(2.) THE assessee is engaged in the manufacture and sale of ayurvedic medicinal preparation and markets the products in the name of 'Dabur'. Assessment year involved is 1985-86. During the accounting year relevant to this assessment year the assessee has incurred expenditure on the following items : In the original assessment ITO has not invoked the provision of S. 37(3A) of the Act. On scrutiny of the record, the CIT has found the order of the ITO as erroneous and prejudicial to the case of the Revenue to the extent the ITO has not invoked the provision of S. 37(3A) of the Act for disallowance on the aforesaid expenditure. In fresh assessment following the direction of CIT he has invoked the provision of S. 37(3A) of the Act and disallowed accordingly. The order of CIT under S. 263 has been challenged by the assessee before Tribunal. Tribunal has taken the view that there is no justification to invoke the provision of S. 37(3A) for disallowance on the aforesaid expenses. The Tribunal has further taken the view that once the provision of S. 37(3A) of the Act has been invoked for disallowance on the hotel expenses, no further disallowance can be made invoking the provision of S. 37(2A) of the Act. Rs. "1. Calendars 5,20,461 2. Panchang 3,82,862 3. Diaries 2,36,725 Total 11,40,048"
(3.) NONE appeared for the assessee though the matter was listed six times.;