LODHA, J. - (1.) THE Tribunal, Jaipur Bench, Jaipur has referred the following question of law which is said to arise out of its order dt. 28th March, 1977 passed in IT Appeal No. 278 (Jp.) 1976-77 relating to the asst. yr. 1974-75 : "Whether, on the facts and in circumstances of the case, the Tribunal is right in holding that the fooding and tea expenses of Rs. 7,269 incurred by the firm in providing tea, etc., to its adatias and customers were in the nature of entertainment expenses within the meaning of s. 37(2B) of the IT Act, 1961 and that they were, therefore, not allowable income in respect of asst. yr. 1974-75?"
(2.) THE ITO vide his order dt. 1st March, 1975 disallowed Rs. 7,269 on the ground that the amount relates to entertainment expenses. On appeal the AAC vide his order dt. 7th April, 1976, deleted the disallowance of Rs. 7,269 made by the ITO. THE Tribunal, relying on CIT vs. Veeriah Reddiar 1976 CTR (Ker) 341 (FB) : (1977) 106 ITR 610 (Ker) (FB) opined that the amount of Rs. 7,269 is hit by provisions of s. 37(2B) of the Act and, therefore, it reversed the order of the AAC restored that of the ITO. It may be stated that the Tribunal preferred the view taken by the Full Bench in Veeriah Reddiar's case (supra) and did not follow CIT vs. Patel Bros. & Co. Ltd. (1977) 106 ITR 424 (Guj) and Brij Raman Dass & Sons vs. CIT 1975 CTR (All) 223 : (1976) 104 ITR 541 (All). In Devichand Bastimal vs. CIT (DB IT Ref. No. 9 of 1977) and Bhanwar Lal vs. CIT (DB IT Ref. No. 42 of 1977, dt. 24th April, 1985) we have held that the expenses incurred in food, tea, etc., to the outside constituent customers viz., messing expenses, are not entertainment expenses and are thus not hit by s. 37(2B) of the Act. In coming to this conclusion. Patel Bros. & Co. Ltd.'s case (supra) and CIT vs. Shah Nanji Nagsi 1978 CTR (All) 305 : (1979) 116 ITR 292 (Bom) and the other High Courts taking the similar view, were followed and dissent was expressed with the view taken in Veeriah Reddiar's case (supra) which was followed by the Tribunal in its order dt. 28th March, 1977. For the reasons mentioned in Devichand Bastimal's case (supra) and Bhanwar Lal's case (supra), we answer the above-said question in the negative, i.e., in favour of the assessee and against the Revenue. The parties are left to bear their own costs of this reference.;