Agrawal, J. - (1.) IN this reference made by the INcome-tax Appellate Tribunal, Jaipur Bench, Jaipur (hereinafter referred to as "the Tribunal"), the following question has been referred for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the expenditure of Rs. 7,945 incurred on providing meals to its trade constituents and tea and soft drinks, etc., to the customers is not expenditure within the meaning of Section 37(2B) of the INcome-tax Act, 1961, and is allowable as deduction in computing the total income for the assessment year 1974-75 ?"
(2.) M/s. Seth Abdulla Yusuf, hereinafter referred to as the assessee, is a registered firm. It derives income as commission agent in fruits and vegetables. In respect of the assessment year 1974-75, the assessee claimed deduction of Rs. 7,945 as business expenditure on account of expenses incurred in providing refreshments such as tea, soft drinks, etc., to the customers who visited the assessee's business premises. The said expenditure was disallowed by the Income-tax Officer under Section 37(2B) of the Income-tax Act, 1961, hereinafter referred to as "the Act". The Appellate Assistant Commissioner on appeal held that the expenses are not in the nature of entertainment and, accordingly, he deleted the addition. The Tribunal while dismissing the departmental appeal has referred the aforesaid question for the opinion of this court. We find that this case is fully covered by the decision of this court in Devichand Bastimal v. CIT [1985] 156 ITR 166 (Raj). In that case, the assessee was carrying on business of "adat" and sale of agricultural commodities and had claimed messing expenses and the question which was referred for the opinion of this court was whether the said expenses were in the nature of entertainment expenditure within the meaning of Section 37(2B) of the Act. This court has held that such expenses cannot be characterised as entertainment expenditure under Section 37(2B) of the Act. In view of the aforesaid decision of this court, the question is answered in the affirmative, i.e., in favour of the assessee and against the Revenue. The parties are left to bear their own costs. Let the answer be returned to the Tribunal as required under sec-260(1) of the Income-tax Act, 1961.;