Commissioner Of Income Tax v. Bennete Coleman & Co. Ltd.

D.R. Dhanuka, J.

1. By this reference under section 256(1) of the Income-tax Act, 1961 ('the Act'), the Tribunal has referred the following three questions of law to this Court for opinion:

I. Whether, on the facts and in the circumstances of the case, the, Tribunal was right in law in holding that the expenses incurred in connection with the customer courtesy, news and advertisement gathering and film fare awards dinner was not in the nature of entertainment and, hence, did not fall under the provisions of section 37(2B) of the Income-: tax Act, 1961?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that medical expenses reimbursement to employees of the assessee-company could not be treated as perquisites for the purpose of computing disallowables under section 40A(5) of the Income-fax Act, 1961 ?

3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the depreciation on building, air-conditioning and plant repurchased by the assessee from Bharat Insurance Co. Ltd., should he granted by computing written down value with reference to the repurchase value, of the building?

It is agreed between the counsels that question No. 2 is covered by the decision of this Court in the case of CIT y. Mercantile Bank Ltd. [1988] 169 ITR 44. In view of the above statement and following the said decision we answer question No. 2 in the affirmative and in favour of the assessee.

2. It is agreed between the counsels that question No. 3 is covered by the decision of the Supreme Court in the case of Calcutta Electric Supply Corpn. Ltd v. CIT [1992] 194 ITR 294, in favour of the revenue. In view of the above statement and following the said decision we answer this question in the negative and in favour of the revenue.

3. The learned counsel for the revenue has concentrated his submissions on question No. 1 and has invited our attention to the judgment of the Tribunal. We have carefully gone through the said judgment and heard the learned counsel for the revenue at some length. We are of the view that the findings recorded by the Tribunal pertaining to this question are findings of fact. The Tribunal has held that the expenses incurred by the assessee are integral part of the business activity of the assessee and do not constitute entertainment expenditure. The Tribunal has, therefore, held that section 37(2B) of the Act is not attracted.

4. Having regard to the facts of this case we are satisfied that the Tribunal was right in reaching the conclusion that the expenses in question did not constitute entertainment expenditure. No case is made out for interference with the finding of fact arrived at by the Tribunal. We, accordingly, answer question No. 1 in the affirmative and in favour of the assessee, i.e., against the revenue. Having regard to the facts and circumstances of the case there shall be no order as to costs.