S.K. Mal Lodha, J.
1. The Income-tax Appellate Tribunal, Jaipur Bench, Jaipur (for short 'the Tribunal'), has referred the following two questions for the opinion of this court:
'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the messing expenses incurred on supplying coffee, tea, etc., to the customers were in the nature of entertainment expenditure and not business expenditure, vide Section 37(2A) and (2B) of the Income-tax Act, 1961 ?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in disallowing hotel expenses of Rs. 809 treating the same as not a business expenditure?'
2. The assessment years involved are 1971-72, 1973-74 and 1974-75. The assessee used to supply bare meals to the constituents who visited the business premises of the assessee. For the assessment year 1971-72, he claimed messing expenses and messing allowance to the tune of Rs. 11,153. The Income-tax Officer, in accordance with the provisions of Section 37(2B) of the Income-tax Act, 1961 (for short 'the Act'), disallowed the claim. For the assessment year 1973-74, he disallowed the messing expenses to the tune of Rs, 11,000 out of a total claim of Rs. 21,308. He also disallowed the hotel expenses amounting to Rs. 809. For the assessment year 1974-75, the Income-tax Officer disallowed the expenses to the extent of Rs. 12,000. Appeals were filed. The Appellate Assistant Commissioner was of the view that the expenses incurred for the supply of meals to the constituents were not in the nature of entertainment expenses. He, however, allowed the claim to the extent of Rs. 5,000, Rs. 6,000 and Rs. 6,000 in respect of the assessment years 1971-72, 1973-74, and 1974-75 respectively.
3. Being dissatisfied, the assessee preferred further appeals in respect of the aforesaid assessment years. The Tribunal, after examining CIT v. Veeriah Reddiar : 106ITR610(Ker) , Brij Raman Dass and Sons v. CIT : 104ITR541(All) and CIT v. Patel Brothers and Co. Ltd. : 106ITR424(Guj) , came to the conclusion that the messing expenses and the expenses incurred for supply of coffee, tea etc., to the customers who visited the assessee's place of business could not be allowed as expenditure incurred wholly and exclusively for the purpose of the tea business and, as such, the expenses are in the nature of entertainment expenses as envisaged by Section 37(2B) of the Act. So far as the claim for Rs. 809 regarding hotel expenses was concerned, the Tribunal directed that the assessee has not been successful in establishing as to how and in what circumstances these expenses can be treated as business expenditure. It, therefore, reached the conclusion that the amount claimed by the assessee cannot be allowed as business expenditure. At the instance of the assessee, the Tribunal has referred the aforesaid two questions for our opinion.
4. We take up the first question first, which need not detain us long, for, it is covered by a decision rendered in Devichand Bastimal v. CIT (D.B.Income-tax Reference No. 9 of 1977) and Bhanwarlal Manakchand v. CIT (D.B. Income-tax Reference No. 42 of 1977) since reported in , decided on April 24, 1985, to which one of us (S.K. Mal Lodha J.) was a party. After taking into consideration the provisions of Section 37(2A) and (2B) of the Act, and also Brij Raman Dass' case : 104ITR541(All) , CIT v. Paid Bros. & Co. Ltd. : 106ITR424(Guj) , CIT v. Veeriah Reddiar : 106ITR610(Ker) and Shah Nanji Nagsi's case : 116ITR292(Bom) , the Division Bench has observed as under (p. 175):
'There is, thus, no doubt that there are two divergent views on the question relating to entertainment expenditure : one taken in Patel Bros. & Co. Ltd.'s case : 106ITR424(Guj) and the other taken in Veeriah Reddiar's case : 106ITR610(Ker) . The tests that have been laid down in Patel Bros. & Co. Ltd.'s case : 106ITR424(Guj) appear to us to be correct for determining the nature of entertainment expenses. Patel Bros. & Co. Ltd.'s case : 106ITR424(Guj) has been followed by the Bombay High Court in Shah Nanji Nagsi's case : 116ITR292(Bom) and other High Courts referred to hereinabove. We respectfully agree with the view taken by the Gujarat High Court in Patel Bros. & Co. Ltd.'s case : 106ITR424(Guj) .'
5. The decisions that have been relied on by the Tribunal have been dissented by this court in Devichand Bastimal's case and Bhanwarlal Manakchand's case, since reported in . In view of the tests laid down in the aforesaid cases of this court, the expenses incurred by the assessee for supplying food, coffee, tea, etc., to its customers, cannot be characterised as entertainment expenses under Section 37(2B) of the Act. The Tribunal was, therefore, not right in holding that the messing expenses claimed by the assessee in respect of the three assessment years, namely, 1971-72, 1973-74 and 1974-75, were in the nature of entertainment expenditure within the meaning of Section 37(2B) of the Act. We, therefore, answer the first question referred to us in the negative, i.e., against the Revenue and in favour of the assessee.
Question No. 2:
6. The Tribunal has stated in its order dated November 30, 1976, that before it, the learned counsel for the assessee could not succeed in showing that a sum of Rs. 809 spent as hotel expenses, was business expenditure. It, therefore, confirmed the finding of the Appellate Assistant Commissioner on this point. It was put to the learned counsel for the assessee to satisfy us regarding the details of the expenses amounting to Rs. 809 in regard to hotel expenses and further to show us as to how this expenditure falls under the head of business expenditure. Learned counsel candidlysubmitted that he is not in a position either to give the details of the expenditure of Rs. 809 nor that it falls under the head 'business expenditure', so that it may be allowed. In these circumstances, we are left with no alternative but to answer this question in favour of the Revenue and against the assessee, for, the Tribunal was right in disallowing the expenditure of Rs. 809.
7. Question No. (1) is answered in the negative, i.e., in favour of the assessee and against the Revenue. Question No. (2) is answered in the affirmative, i.e., in favour of the Revenue and against the assessee.
8. We leave the parties to bear their own costs of this reference. Let a copy of the judgment be sent to the Tribunal in accordance with Section 260(1) of the Act.