- (1.) THE reference here pertains to the following questions : " (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the depreciation under Section 32 (l) (ii) of the Income-tax Act was not admissible in respect of the building of Ram Mandir ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the expenditure of Rs. 6,000 disbursed for being incurred on maintenance of Ram Mandir, was not allowable under Section 37 (1) of the Income-tax Act ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the expense items of Rs. 2,514, Rs. 24,801, Rs. 2,378 and Rs. 838 were hit by the provisions of Section 37 (2a) of the Income-tax Act ? (4) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in disallowing legal expenses amounting to Rs. 7,243 incurred in connection with the criminal litigation pertaining to criminal conspiracy for commission of offence under the Essential Commodities Act, 1955 ?"
(2.) THE answer to the first two questions has to be in the negative, in favour of the assessee and against the Revenue keeping in view the earlier judgment of this court in Atlas Cycle Industries Ltd. v. CIT [1982] 134 ITR 458, pertaining to the same assessee for the earlier years.
(3.) AS regards question No. (3), which concerns expenditure incurred on entertainment, the matter is covered by the decision of our Full Bench in CIT v. Khem Chand Bahadur Chand [1981] 131 ITR 336, where it was held that all hospitality extended wholly or exclusively for the purposes of business, whether lavish or frugal, comes within the ambit of the phrase "in the nature of entertainment expenditure" and is consequently subject to the ceiling limits prescribed in Clauses (i) to (iv) of Sections 37 (2a) of the Income-tax Act, 1961. This question has thus to be answered in the affirmative, in favour of the Revenue and against the assessee.;