Commissioner of Income Tax vs Mangalam Cement Ltd.

On an application u/s 256(1) of the IT Act, the Tribunal has referred the following questions for our opinion :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of Rs. 2,78,896 by holding that giving gifts and presents does not amount to hospitality and cannot be considered for disallowance as entertainment expenditure ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of Rs. 2,78,896 by holding that it is not entertainment expenditure despite the fact that in that event the expenditure would have to be treated as that on, "advertisement" and "publicity" and hence disallowable under Rule 6B of the IT Rules, 1962 ?"

Heard learned counsel for the parties.

We have considered similar question in the case of CIT v. Mangalam Cement Ltd (DB IT Ref. No. 10/1999)

Following the view taken by us in case of CIT v. Mangalam Cement Ltd. (supra), we answer question No. 1 in negative i.e., in favour of the Department and against the assessee. Question No. 2 need not be answered as amount and nature of expenditure is same. Therefore, we decline to answer question No. 2.

The reference so made stands disposed of accordingly.