Commissioner Of Income-Tax vs Gem Financiers And Distributors … on 4 January, 2001

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Delhi High Court
Commissioner Of Income-Tax vs Gem Financiers And Distributors … on 4 January, 2001
Equivalent citations: 2001 250 ITR 786 Delhi, 2001 117 TAXMAN 75 Delhi
Author: A Pasayat
Bench: A Pasayat, D Jain


JUDGMENT

Arijit Pasayat, C.J.

1. At the instance of the Revenue, the Income-tax Appellate Tribunal, Delhi Bench-B (in short “the Tribunal”), has referred the following question under Section 256(1) of the Income-tax Act, 1961 (in short “the Act”), for the opinion of this court :

“Whether, on the facts and circumstances of the case, the Tribunal was correct in law in holding that add backs of Rs. 5,000 and Rs. 2,983 as

made by the Income-tax Officer were rightly deleted by the Commissioner of Income-tax (Appeals) ?”

2. A brief reference to the facts would suffice : For the assessment year 1974-75, the assessed made certain claims for business promotion expenditure. The assessed is a distributor of commercial films in the territories of Delhi and Uttar Pradesh. During the accounting year relevant to the assessment year in question, the assessed incurred an expenditure of Rs. 15,674 towards the premier show of a film. The break-up of the same is as follows :

Rs.

(a) Ashoka Hotel bill for lodging and boarding of film stars,
producers, director and other technicians 10,713.50

(b) Janpath Hotel bills for some of the film stars for their
lodging and boarding 742.00

(c) Expenses incurred for press show 1,368.10

(d) Taxi hire charges of film stars, producer, director, etc.,
during their stay at Delhi at the time of premier 2.850.00
15,673.60

3. The assessed’s stand was that the expenditure was in the nature of advertisement. The Income-tax Officer was of the view that some of the expenses were in the nature of entertainment expenditure. As full details were not available, he disallowed a sum of Rs. 5,000 on estimate basis. The matter was carried in appeal before the Commissioner of Income-tax (Appeals) (“the CIT (A)” in short). The said authority held that the expenditure was in the nature of advertisement and not entertainment, as the premier show would give a wide publicity to the film. The Revenue carried the matter further in appeal before the Tribunal. It is to be noted that there was another claim of Rs. 2,983 under the head “Business promotion expenses”. Disallowance in respect of the said amount as made by the Assessing Officer was nullified by the Commissioner of Income-tax (Appeals). This deletion was also questioned in the appeal filed by the Revenue. The Tribunal held that the amounts were relatable to expenses incurred on advertisement so far as the claim of Rs. 5,000 is concerned and so far as the sum of Rs. 2,983 is concerned the same was clearly allowable as business expenses having been spent on purchase of tea, cool drinks for visiting exhibitors, producers, film journalists and members of the trade.

4. On being moved for reference, the question as set out above has been referred.

5. We have heard learned counsel for the Revenue. There is no appearance on behalf of the assessed, in spite of service of notice.

6. Learned counsel for the Revenue submitted that the Tribunal’s conclusions on both the amounts are erroneous. According to him, the expenses are not covered by Section 37 of the Act.

7. So far as the sum of Rs. 5,000 is concerned we find that the Tribunal, after analysing the factual aspects, has held that the same was spent for the purpose of advertisement, The conclusion being factual, no question of law arises. So far as the second expenditure is concerned the matter is clearly covered by a decision of the apex court in CIT v. Patel Brothers and Co. Ltd. [I995] 215 ITR 165, in favor of the assessed and against the Revenue.

8. That being the position, we answer the question referred in the affirmative, in favor of the assessed and against the Revenue.

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