KRAFT PALACE VS COMMISSIONER OF INCOME TAX, 1993 PTD-ALLAHABAD-HIGH-COURT-INDIA 830 (1991)

Income-tax---

....Reference---Business expenditure---Entertainment expenditure-- Expenditure in providing mineral water for foreign customers---Whether expenditure for hospitality---Question of law---Indian Income Tax Ad, 1961, Ss37(2A) & 256.

Held, that the question whether the Tribunal was justified in holding that the expenditure incurred by the assessee in providing mineral and aerated water to its foreign customers was in the nature of hospitality and could be disallowed under section 37(2A) of the Income Tax Act, 1961, was a question of law.

JUDGMENT

Having heard learned counsel for the parties, we find that the question raised in the present case is the same as in the assessment year 1984-85. For the said year, we have, by our order, dated April 30, 1991, called for a question of law. Accordingly, following the said judgment, we direct the Income Tax Appellate Tribunal concerned to draw up a statement of the case and refer the following question of law to this Court for our opinion in accordance with law:

"Whether, on a proper interpretation of the nature and scope of the provisions of section 37(2A) of the Act, the Income Tax Appellate Tribunal was justified in holding that the expenditure incurred by the assessee on providing mineral and aerated water to its foreign customers was in the nature of expenditure on providing `hospitality' and the same was thus liable for disallowance under the said section?"

There shall be no order as to costs.

M.B.A./2261/TOrder accordingly.