:1: bgp bgp bgp IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION INCOME INCOME INCOME TAX REFERENCE NO.15 OF 1993 TAX REFERENCE NO.15 OF 1993 TAX REFERENCE NO.15 OF 1993 The Bombay Oil Industries Pvt.Ltd. ..Applicant Vs. Commissioner of Income Tax ..Respondent Mr.A.K.Jasani i/b.Ashok Boghani & Co. for the Applicant. Mrs. Anamika Malhotra for the Respondent. CORAM CORAM CORAM :- DR.S.RADHAKRISHNAN & :- DR.S.RADHAKRISHNAN & :- DR.S.RADHAKRISHNAN & S.J.KATHAWALLA, S.J.KATHAWALLA, S.J.KATHAWALLA, JJ. JJ. JJ. DATE DATE DATE : 21ST AUGUST, 2008 : 21ST AUGUST, 2008 : 21ST AUGUST, 2008 P.C. P.C. P.C. 1. Heard the learned Counsel for the parties. The above Reference pertains to A.Y.1984-85. The Income Tax Appellate Tribunal has referred the following substantial questions of law for the opinion of this Court. 1. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in treating the expenditure of Rs.11,83,295/- in question as in the nature of entertainment expenditure as envisaged by the provisions of Section 37(2A) read with Explanation (2) thereof? 2. Whether the Income Tax Appellate Tribunal was justified in law in not distinguishing the aforesaid expenditure which was nature of quid pro quo to distributors for boosting sales over certain limits from entertainment expenditure? 3. Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the expenditure amounting to Rs.7400/- incurred by the assessee for issue of gift coupons to the distributors and dealers by way of quid pro quo for boosting its sales was entertainment expenditure within the meaning of Section 37(2A) read with Explanation (2) thereof? :2: 2. We have perused the judgment dated 2nd March,1991 passed by the Income Tax Appellate Tribunal. We have also perused the provisions of Section 36 and 37 of the Income Tax Act. 3. Mr.Jasani referred to the judgment of the Rajasthan High Court in the case of CIT Vs. Green CIT Vs. Green CIT Vs. Green Roadways Roadways Roadways 154 ITR 639 154 ITR 639 154 ITR 639 and also the judgment of the Calcutta High Court in the case of CIT Vs. Santosh CIT Vs. Santosh CIT Vs. Santosh Agencies Agencies Agencies 210 ITR 78, CIT Vs. Shalimar Industries (P) 210 ITR 78, CIT Vs. Shalimar Industries (P) 210 ITR 78, CIT Vs. Shalimar Industries (P) Ltd. Ltd. Ltd. 78 ITR 521 78 ITR 521 78 ITR 521 and also on the judgment of the Gauhati High Court in the case of CIT Vs. Assam CIT Vs. Assam CIT Vs. Assam Asbestos Asbestos Asbestos Ltd. 240 ITR 297 Ltd. 240 ITR 297 Ltd. 240 ITR 297 to contend that the order passed by the Tribunal was totally unjustified, as the Assessee had claimed the expenditure as business expenditure under Section 37(1) of the Income Tax Act, which was fully justifiable. 4. Mrs.Malhotra, the learned Counsel for the Respondent also very fairly concedes, that in the above, the Applicant is entitled to claim the said expenditure by way of business expenditure under Section 37(1) of the Income Tax Act. In view thereof, we answer all the above three questions in the negative and in favour of the Assessee and against the Revenue. (S.J.KATHAWALLA,J.) (S.J.KATHAWALLA,J.) (S.J.KATHAWALLA,J.) (DR.S.RADHAKRISHNAN,J.) (DR.S.RADHAKRISHNAN,J.) (DR.S.RADHAKRISHNAN,J.)