ADDITIONAL COMMISSIONER OF INCOME TAX Vs. MADDI VENKATARATNAM AND COMPANY LIMITED

JUDGEMENT

(1.) IN this case, at the instance of the revenue, the following question has been referred to us for our opinion :

(2.) THE facts leading to this reference are as follows :

(3.) IT will be noticed that in the decision of the Bombay High Court the question as to what constitutes entertainment and when a particular item of expenditure can be said to amount to entertainment expenditure within the meaning of Section 37(2) was not analysed by the Bombay High Court. However, in CIT v. Patel Brothers and Co. Ltd. [1977] 106 ITR 424, a Division Bench of the Gujarat High Court, of which I was a member, has analysed the whole concept of entertainment expenditure. Mehta J., delivering the judgment of the Division Bench of the Gujarat High Court has observed at page 441.