- (1.) IN these references made by the Rajasthan INcome-tax Appellate Tribunal (hereinafter referred to as "The Tribunal") at the instance of the assessee, namely, Messrs. Associated Stone INdustries (Kota) Ltd., Ramganjmandi, with regard to the assessment years 1974-75 and 1975-76, the following questions have been referred to this court: "(1) Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the amount of Rs. 2,08,003, being conditional subsidy, received from the Rajasthan Government under the subsidised Housing Scheme for industrial workers did not form 'part of the actual cost of the labour colony under Section 43(1) and, consequently, the assessee-company was not entitled to get deduction for depreciation on the said amount under Section 32 of the INcome-tax Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the messing expenses of Rs. 14,403 and Rs. 15,581 incurred by the assessee-company for providing meals to the constituents at the guest house maintained at Ramganjmandi was not allowable as deduction under Section 37 of the INcome-tax Act, as the same was in the nature of entertainment expenses ? (3) Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the expenditure of Rs. 7,765 Rs. 9,000 incurred by the assessee-company in providing tea, cold drinks, etc., to the constituents who visited its business premises was not allowable as deduction under Section 37 of the INcome-tax Act, as the same was in the nature of entertainment expenses ?"
(2.) SHRI Mehta, learned counsel for the assessee, has invited our attention to the decision of this court dated January 27, 1987, in Associated Stone Industries (Kota) Ltd. v. CIT in D. B. I. T. Ref. No. 99 of 1979. The said reference case was between the present assessee and the Revenue and it related to the assessment year 1973-74. There also, three questions which were more or less identical to the questions under consideration in these references have been considered by this court. Question No. 1 was answered against the assessee and in favour of the Revenue and questions Nos. 2 and 3 were answered in favour of the assessee and against the Revenue. SHRI Mehta has submitted that the present case is fully covered by the said decision. Shri Singhal does not dispute that the said decision fully covers questions Nos. 1 and 3. With regard to question No, 2, Shri Singhal has submitted that the said question should be answered in favour of the Revenue and against the assessee and in this connection, he has urged that the expenditure of Rs. 14,403 and Rs. 15,581 which has been claimed by the assessee in respect of the assessment years 1974-75 and 1975-76, respectively, by way of messing expenses for providing meals to its constituents at the guest house at Ramganjmandi should not be allowed in view of the provisions contained in Sub-section (4) of section 37 of the Income-tax Act (hereinafter referred to as "the Act"). In our view, the said contention of Shri Singhal cannot be accepted. The question which has been considered by the income-tax authorities is with regard to the said expenses being not allowable under Sub-section (2B) of section 37 of the Act and whether the expenditure is in the nature of entertainment expenditure. The Income-tax Officer, the Appellate Assistant Commissioner and the Tribunal have held that the said expenses were in the nature of entertainment expenditure and the same could not be allowed in view of Sub-section (2B) of section 37 of the Act. That is the only matter which has been considered by the authorities and the question whether the said expenses were not allowable in view of Sub-section (4) of Section 37 of the Act was neither raised nor has it been considered by the Tribunal. In our opinion, the question whether the said expenses are dis-allowable under Sub-section (4) of section 37 of the Act is an independent question which cannot be said to arise out of the matter which has been considered by the Tribunal relating to the applicability of Sub-section (2B) of Section 37 of the Act. The said question cannot, therefore, be gone into while dealing with question No. 2 which has been referred to this court. Question No. 2 is in the same terms as question No. 2 which was considered by this court in its decision dated January 27, 1987, in D. B. I. T. Ref. No. 99 of 1979 and, for the reasons given in the said decision, the said question must be answered in favour of the assessee and against the Revenue. In the result, question No. 1 is answered in the affirmative, i.e., against the assessee and in favour of the Revenue and questions Nos. 2 and 3 are answered in the negative, i.e., in favour of the assessee and against the Revenue. No order as to costs.;