Delhi H.C : Whether the Tribunal was correct in law and on facts in holding that expenses incurred on account of tea, refreshments, lodging expenses, etc., under the head ‘General charges’ are not of the nature of entertainment and thereby deleting the disallowance of Rs. 8,209 ?

Counsel Appeared

D.K. Jain & R.N. Verma, Advocate, for the Revenue : C.S. Aggarwal & Anil Sharma, Advocate, for the Assessee

LEILA SETH, J.:

By this application under s. 256(2) of the IT Act, the CIT is praying that the Tribunal be directed to state a case and refer the following two questions of law for the opinion of this Court :

“(i) Whether the Tribunal was correct in law and on facts in holding that expenses incurred on account of tea, refreshments, lodging expenses, etc., under the head ‘General charges’ are not of the nature of entertainment and thereby deleting the disallowance of Rs. 8,209 ?

(ii) Whether the Tribunal was correct in law and on facts in holding that there was no underestimate of income for the purpose of levy of interest under s. 216 and thereby further holding that the assessee is not liable to be charged with interest under section 216 ?”

2. The relevant assessment year is 1973-74. Mr. Aggarwal concedes that, on the facts and circumstances of the case; question No. (i) is a question of law and direction should issue to the Tribunal. In any case, for the earlier asst. yr. 1972-73, the Tribunal itself has referred a similar question in IT Ref. No. 66 of 1980.

3. Consequently, we direct the Tribunal to draw up a statement of case and refer question No. (i) for the opinion of this Court.

4. With regard to question No. (ii), it appears that the assessee estimated the advance tax liability as on June 13, 1972, at Rs. 5,25,000. Subsequently, on October 7, 1972, it estimated the advance tax liability at Rs. 7,50,000. The accounting year came to a close on October 31, 1972.

5. The Tribunal has found as a fact that there was no underestimation of advance tax.

6. In CIT vs. Nagri Mills Ltd. (1986) 57 CTR (Guj) 304 : (1987) 166 ITR 292, the Gujarat High Court held that no interest is chargeable under s. 216 as the ITO had failed to record a finding that there had been an underestimate by the assessee and, consequently, no question of law arose.

7. In the present case, as abovementioned, the Tribunal came to a categorical finding that there is no underestimation. This is a finding of fact and, consequently, no question of law arises out of the order of the Tribunal.

8. We, therefore, decline to direct the Tribunal to refer question No. (ii).

9. The application is partly allowed. However, in the circumstances of the case, we make no order as to costs.

[Citation :185 ITR 651]