- (1.) ON an application filed under S. 256(1) of the IT Act, the Tribunal has referred the following questions for the opinion of this Court : "Whether, on the facts and in the circumstances of the case, the expenditure incurred by the assessee on the preparation of the income-tax returns is an expenditure laid out wholly and exclusively for the purpose of the business of the assessee and so is allowable under S. 37(1) of the IT Act, 1961 ? Whether, on the facts and in the circumstances of the case, the messing expenses and/or the expenses on tea and coffee, etc., incurred by the assessee in the accounting period relevant to the asst. yr. 1978-79 in respect of its customers are/is an expenditure in the nature of entertainment expenditure within the meaning of S. 37(2A) of the IT Act, 1961?"
(2.) THE assessment year involved is 1978-79 for which the previous year ended on 30th Sept., 1977. In the year under consideration, the assessee has claimed Rs. 9,092 as deduction out of which Rs. 6,000 against fees paid to the chartered accountant for filing the return. The assessee has also claimed expenses incurred on customers and claimed deduction under S. 37(2A) of the Act. The expenditure which was paid to the chartered accountant for filing the return was disallowed by the Tribunal, against that the assessee preferred the reference application and the amount incurred on the customers has been allowed by the Tribunal, against that the reference application has been preferred by the Department. Heard the learned counsel for the parties. Considering the submissions, the fees paid to the chartered accountant for preparing and filing the return, in our view, is in no way wholly and exclusively for the purpose of business or earning income, therefore, there is nothing wrong in the view taken by the Tribunal.
(3.) THE question referred at the instance of the Revenue is as to whether the expenditure incurred on the customers, that can be allowed under S. 37(2A) or (2B) of the Act. In this context, Mr. Mehta brought to our notice the decision of this Court in the case of CIT vs. Associated Stone Industries wherein the question has been answered in favour of the assessee.;