- (1.) At the instance of the revenue, the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for brevity, 'the Tribunal'), while exercising jurisdiction under Section 256(1) of the Income Tax Act, 1961 (for brevity, the Act'), has referred the following questions of law, which are claimed to have arisen from order dated 22-4-1993, passed in ITA No. 125/Chd/ 1988, in respect of assessment year 1982-83: Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing weighted deduction under Section 35B on commission paid to the parties in India Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that provisions of Rule 6AA which came on the statute book with effect from 1-8-1981 were applicable to the pending assessments pertaining to the previous years ending before the date of operation of the provisions Whether, on the facts and in the circumstances of the case, the Tribunalwas right in law in holding that Rule 6B is not applicable to expenditure ongifts made to dealers in excess of Rs. 50 each, on the assumption thatthese did not bear the name and logo of the assessee company Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that lodging expenses are not in the nature of entertainment expenses Whether, on the facts and in the circumstances of the case!, the Tribunal was right in law in allowing full triple shift allowance: on machinery ignoring the fact that the machinery did not work for triple shift during the entire period of the previous year
(2.) At the outset it is appropriate to notice that learned Counsel for the applicant revenue has confined his arguments to question No. 4, only and did not press the other questions of law, which have been referred by the Tribunal for opinion of this Court.
(3.) Question No. 4 pertains to the controversy whether lodging expanses are in the nature of entertainment or not. In that regard, the respondent assessee has claimed deduction of dealers' boarding and lodging expenses of Rs. 6,997. Other than this, deduction of lodging expenses and boarding expenses to the tune of Rs. 16,009 and Rs. 11,204 respectively was also claimed out of export promotion expenses. The assessing officer held these expenses relating to hospitality and disallowed the same to be considered as entertainment expenses. The view of the assessing officer has been upheld by the Commissioner (Appeals). On further appeal before the Tribunal, it has been held that boarding expenses partake the character of hospitality and, thus, have been rightly disallowed. Regarding lodging expenses of Rs. 4,100 out of composite amount of Rs. 6,997, under the head "Dealers' boarding and lodging expenses" and the amount of Rs. 16,009 out of export promotion expenses, the Tribunal has held that these expenses were not in the nature of entertainment expenses but were business expenses, which had to be allowed as a deduction.;