1. The only issue raised in this appeal preferred by the assessee, Travel Agents Association of India, Bombay, for the assessment year 1978-79, for which the relevant previous year ended 31-12-1977, pertains to disallowance of Rs. 45,000, out of sum of Rs. 50,000 paid by the assessee to Pacific Area Travels Association (India), being the assessee's share of contribution towards "Food Festival" held at the time of conference. The Commissioner (Appeals) considered the disallowance of Rs. 45,000 under Section 37(2) as entertainment.
2. The learned authorised representative for the assessee in detail submitted that the Travel Agents Association of India had incurred the said expenditure in fulfilment of its objects as detailed in the memorandum of association. He submitted at length that at the time of the conference of Pacific Area Travels Association (India) Chapter, more popularly known at PATA, a sum of Rs. 1,30,000 was spent on Food Festival in which about 2,000 people were hosted out with pure and simple meal comprising of different types of dishes made in India and towards the said amount of Rs. 1,30,000, the assessee had contributed a sum of Rs. 50,000, with Rs. 50,000 coming from Federation of Hotels and Restaurants Association of India and Rs. 30,000 coming from PATA (India) Chapter. He submitted that as per bill for the said amount and receipt of Rs. 50,000, it is apparent that it was a contribution made by the assessee towards the said "Food Festival" in which only meals were served. There was neither any element of drink nor any entertainment in the form of dances or cultural programme. He placed on the assessee's compilation a copy of Travel News which detailed a lot of information about PATA 78 conference which was more or less a Government sponsored function. He also placed on the assessee's compilation brochures such as "Who is Who at PATA" and its programme of the conference. He also drew our attention to the correspondence between the assessee and Dy. Director General of Tourism Department as per which it was obliged to contribute its own share of Rs. 50,000 for the said "Food Festival". He submitted that as a matter of fact, the said contribution was made in order to advance the interest of Travel Agents of India ; and the said conference came to be inaugurated by the then Prime Minister. He placed his reliance on the Bombay High Court in CIT v. Shah Nanji Nagsi  116 ITR 292.
3. The learned departmental representative, on the other hand, besides placing his reliance on the order of the Commissioner (Appeals), submitted that there was a dinner hosted out by the PATA on 23-1-1978 and it was towards the said dinner that a sum of Rs. 50,000 was contributed by the assessee, as assessee was one of the hosts. He placed his reliance on ACC-Vickers Babcock Ltd. v. CIT  103 ITR 321 (Bom.) and also on CIT v. Shah Nanji Nagsi's case (supra).
4. After taking into consideration the rival submissions made by both the parties and perusing the facts carefully on record, we are unable to sustain the said disallowance of Rs. 45,000, being on account of entertainment under Section 37(2). From perusal of the memorandum of association, we find that following are the objects of the assessee : (a) To take all steps which may be necessary for promoting or opposing any action affecting the aforesaid interest and in general to take initiative to secure the welfare of the Travel Trade in all respects.
(b) To encourage and promote friendly feeling among Travel Agents on all subjects involving their common good and benefit.
(c) To secure organised action on all subjects relating to the interest of the Travel Trade directly and/or indirectly.
(d) To promote the interests of the Travel Trade in matters of inland and foreign trade, shipping, railway, roadway and air transportation, freight, banking, insurance, hotels, inns, lodgings, boarding houses, etc.
(1) To participate in all commercial and financial transactions which are in direct or indirect relationship with the above-mentioned objects and to invest or deposit the moneys of the company in such manner as may from time to time be determined by the company.
There is also no dispute about the fact that the PATA conference was held in 1978 at the instance of the Tourist Department, Government of India, which comprised of large number of items and functions arranged from 21-1-1978 to 24-1-1978. In the said function, one of the programmes which was held at 8 p.m. on 23-1-1978 was "Food Festival" of India, hosted by the Federation of Hotel and Restaurant Association of India, Travel Agents Association of India and PATA (India) Chapter, held at Hotel Oberoi Intercontinental. It was in respect of this "Food Festival" that the assessee contributed its share of Rs. 50,000, which is clear from the following certificate from PATA placed on the assessee's compilation : We hereby certify that for the above function held in January 1978, jointly hosted by TAAI, FHRAI and PATA (India) Chapter, we made payment to Hotel Oberoi Intercontinental, New Delhi, for Rs. 1,30,000 for 1,800 delegates against their Bill No. 20118. This amount was disbursed from the contributions received as under : Rs.- Travel Agents Association of India 50,000- Federation of Hotel & Restaurant Association of India 50,000- PATA (India) Chapter 30,000 --------- From the above certificate, it is apparent that the number of people hosted out in the said Food Festival were 1,800 in all and the total expenditure on such festivals in all was incurred at Rs. 1,30,000 which comes to about Rs. 72 per head. Looking to the assessee's nature of business and its objects, the contribution of Rs. 50,000 by the assessee in respect of "Food Festival" in which, however, food alone was served to 1,800 people though at a five-star hotel, could not be termed as entertainment, because entertainment is a very relative term and while adjudicating a particular expenditure as entertainment, it cannot be ignored as to what is the business of the assessee and what are the types of people who have been hosted at the dinner in the form of "Food Festival". It was an inter-national function and a large number of foreign dignitaries from all over the world, such as Afghanistan, America, Samoa, Australia, Brunei, Canada, Denmark, Egypt, Fiji, France, Hawaii, Hongkong, Indonesia, Israil, Japan, Korea, Macau, Malaysia, Micronesia, Nepal, New Caledonia, New Guinea, Papua, Netherlands, New Hebrides, New Zealand, Pakistan, Philippines, Saudi Arabia, Singapore, Sri Lanka, Sweden, Tahiti, Tanzania, Taiwan, Thailand, USA, United Kingdom and West Germany, etc., were attended. By serving food to people of high dignitaries in trade, besides the local dignitaries, such as Ministers of the Central Cabinet and high officials in trade and Government, it could not by any stretch of imagination be treated as entertainment.
5. When we peruse the receipt of Rs. 50,000, we find the particulars given in the said receipt are "received cheque No. L. 0660958 for Rs. 50,000 (rupees fifty thousand only), from the Travel Agents Association of India, being their share of Food Festival of India being held during PATA conference." There is no dispute about the fact that it was at the instance of the Government of India, Department of Tourism, that the said "Food Festival" was organised which should be clear from the letter of Shri P.N. Seth, Deputy Director General, Government of India, Department of Tourism, New Delhi-1, dated 12-12-1977, which reads as under : This has reference to my conversation with you regarding the proposed dinner from travel industry of India to PATA delegates of January 23, 1978.
It is proposed to call this dinner as Food Festival of India. The invitations will be issued in the name of travel industry of India.
The host will be Travel Agents Association of India, Federation of Hotel and Restaurant Assn. of India and PATA India Chapter.
I had discussed this matter with Mr. Bhagwan Kanuga during his last visit to Delhi. He did not appear to have any objection to TAAI being one of the hosts so long as their expenditure is limited to Rs. 50,000 only. I shall be grateful if you could kindly talk to your Managing Committee and confirm this arrangement to me as soon as possible... With kind regards.
We also cannot ignore the Article written on this occasion by Shri Pran N. Seth, head note as "PATA Marks a Take-Off Stage for India Tourism" spelt out in the following words : The purpose of hosting another PATA Conference in India, after a period of 12 years is exactly the same. PATA has expanded considerably. Its annual conventions now attract more than 1,200 delegates. Among them are leading representatives of national tourist organisations, tour operators both retailers and wholesalers, leading hoteliers, senior airline executives, travel writers and journalists. This year, about 50 travel writers, representing leading world publications, have accepted our invitation.
The chief guest inaugurating the said conference was the then Prime Minister, Shri Morarji Desai, who stated as under on that occasion : ... the conference brought together people of the world and made them understand each other. Tourism increases the contact of people with other countries and also helps to earn foreign exchange. Mr.
Desai emphasised that the monetary consideration was only incidental and that he would not like to commercialise tourism as it would then lose its real purpose. Tourism also helps us to learn from others and to know how we appear to them, he added. He thus felt that adequate facilities should be provided for tourists and Government should offer all possible assistance.
Travel agencies could organise tourism far more efficiently than Government could, Mr. Desai said, and offered Government help to make their work easier and more effective-that must have been music to the travel agents' ears, and there was considerable applause.
Mr. Desai stressed the need for travel and accommodation facilities that would be within the reach of most people by promoting domestic tourism. He said that India would also make available low-priced facilities for foreign tourists who cannot afford Five Star Hotels.
Mr. Desai created a mild flutter by stating that he himself could not afford such accommodation.
In concluding, Mr. Desai requested the delegates to offer their suggestions which would help to make the tourist's stay more pleasant and offer him more facilities, so that more people visit other countries, exchange views and bring the world together. That would help to end strife and bring peace to the world. 'I attach great importance to this activity in all countries, particularly in my own country and it is, therefore, with the greatest pleasure that I inaugurate the 27th conference.
6. In the light of the above discussion, we are convinced that the contribution of the assessee in a sum of Rs. 50,000 towards Food Festival organised at the time of PATA Conference in 1978 cannot be termed as entertainment. On the basis of facts alone, we accept the contention of the assessee and delete the addition of Rs. 45,000 made by the Commissioner (Appeals).