B.K. Mehta, J.
1. At the instance of the Commissioner, the following two questions have been referred to us for our opinion :
'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that the messing expenses were not disallowable under 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 coming to the conclusion that only a sum of Rs. 3,000 should be disallowed under Section 37(2B) of the Income-tax Act, 1961 ?'
2. We need not set out the facts and circumstances elaborately in which these questions have been raised. Suffice it to say for the present purposes that when these questions were referred to us by the Appellate Tribunal, the provision under which the question of admissibility of entertainment expenses arose was as it then stood as Sub-section (2B) of Section 37 of the Income-tax Act. It should be recalled that by Section 10 of the Finance Act, 1970 (19 of 1970), the aforesaid Sub-section (2B) was, inter alia, added with effect from April 1, 1970, The said Sub-section (2B) read as under ;
'(2B) Notwithstanding anything contained in this section, no allowance shall be made in respect of expenditure in the nature of entertainment expenditure incurred within India by any assessee after the 28th day of February, 1970.'
3. It should be further recalled that by the aforesaid Finance Act, Explanation to Sub-section (2A), as it then stood, was sought to be amended so as to make the Explanation applicable for purposes of this Sub-section (2B). Now, this old Sub-section (2B) was omitted by the Finance Act, 1976, w.e.f. April 1, 1977. Consequently, the words 'for the purposes of subsection (2B)' added in the Explanation as aforesaid were also omitted w.e.f. the same date. By Finance Act, 1983, this Explanation was treated as Explanation 1 and a new Explanation as Explanation 2 was added with retrospective effect from April 1, 1976. A new provision numbered as Sub-section (2B) was again inserted w.e.f. April 1, 1979, by the Taxation Laws (Amendment) Act, 1978. The combined effect of this amendment, and particularly the addition of Explanation 2 with retrospective effect from April 1, 1976, is to be considered for purposes of answering the questions referred to us. It is necessary, therefore, to read Explanation 2 which has been retrospectively inserted by the Finance Act, 1983, w.e.f. April 1, 1976. It reads as under :
'Explanation 2.--For the removal of doubts, it is hereby declared that for the purposes of this sub-section and Sub-section (2B), as it stood before the 1st day of April, 1977, 'entertainment expenditure' includes expenditure on provision of hospitality of every kind by the assessee to any person, whether by way of provision of food or beverages or in any other manner whatsoever and whether or not such provision is made by reason of any express or implied contract or custom or usage of trade, but does not include expenditure on food or beverages provided by the assessee to his employees in office, factory or other place of their work.'
4. We have, therefore, to see as to whether the Tribunal was right in concluding that the messing expenses could not have been disallowed under Section 37(2B), as it then stood. Though in the statement of the case the facts are not clear, we gather from the order of the Commissioner (Appeals) that the assessee is a contractor having works at the relevant time at Jabalpur, Bhandak and Hanger and a large number of employees were employed in three sites which were far away from the inhabited places and, therefore, the employees were required to be provided with food and living facilities. We also, gather from the order of the Commissioner (Appeals) that the assessee wag claiming on this count an amount of Rs. 49,462 as messing expenses. The Commissioner substantially allowed this claim by restricting the disallowance to Rs. 3,000. This fact is not controverted by the Department before the Tribunal which was concerned only with the question (as was the Commissioner (Appeals)) as to whether the amount of Rs. 46,462 which was on account of messing expenses should be allowed or disallowed under Section 37(2B). In view of the unequivocal provision made in the Explanation that entertainment expenses would not include expenditure on food provided by the assessee to the employees in office, factory or other places of work, we have to answer the question No. 1 in favour of the assessee. We, therefore, answer question No. 1 in the affirmative, i.e., in favour of the assessee and against the Revenue. However, as regards question No. 2, since no appeal was preferred by the assessee, there was no question of it being considered by the Tribunal and, therefore, it cannot be said that it was a question arising out of the order of the Tribunal. Question No. 2, therefore, need not be answered.
5. The result is that we answer question No. 1 in the affirmative, i.e., in favour of the assessee and against the Revenue. We decline to answer question No. 2. There would be no order as to costs.