IN THE HIGH COURT OF DELHI AT NEW DELHI 
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         ITA 586/2008  
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 DIRECTOR OF INCOME TAX                          ..... Appellant 
 Through       Ms. Prem Lata Bansal, Adv. 
 . 
 versus 
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 APPAREL EXPORT PROMOTION COUNCIL                ..... Respondent 
 Through       None 
 . 
 CORAM: 
 HON'BLE MR. JUSTICE MADAN B. LOKUR 
 HON'BLE MR. JUSTICE MANMOHAN SINGH 
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 . 
 O R D E R 
                      29.05.2008 
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 The Revenue is aggrieved by an order dated 13th July, 2007 passed by the 
 Income Tax Appellate Tribunal, Delhi Bench 'G' in ITA No. 4307/Del/2004 relevant 
 for the Assessment Year 2001-2002. 
 The Assessee is concerned with promoting exports particularly of textiles 
 and readymade garments from India.  In the relevant accounting year, the 
 Assessee has incurred an expenditure of Rs. 8,19,277/- towards entertainment. 
 Out of this, a sum of Rs. 5,88,705/- pertained to the entertainment expenditure 
 incurred by  the  Chairman  of  the  Council.  This ITA 586/2008 
 Page no. 1 of 3 
 was disallowed by the Assessing Officer as well as by the Commissioner of Income 
 Tax (Appeals) on the ground that there was no material to support the 
 expenditure incurred and that as compared to previous years, the amount was 
 fairly high. 
 The Tribunal has noted that the Assessee is required to interact with 
 foreign delegates etc. and for the purposes of generating exports, the Assessee 
 is required to hold meetings over lunches and dinners with foreign delegates. 
 Under these circumstances, the expenditure incurred towards entertainment was 
 justifiable. 
 The Tribunal has also referred to the decision of the Supreme Court in 
 S.A. Builders Ltd. vs. Commissioner of Income Tax (Appeals) and Anr. [2007] 288 
 ITR 1.  In this decision, the Supreme Court has held as follows:- 
 ?The income tax authorities must put themselves in the shoes of the assessee and 
 see how a prudent businessman would act.  The authorities must not look at the 
 matter from their own view point but that of a prudent businessman.? 
 Under the circumstances, we are of the view that it was not possible for 
 the Assessing Officer to substitute his opinion of the amount that should have 
 been spent towards entertainment and promotion of exports. 
 ITA 586/2008                                                 Page no. 2 of 3 
 We do not see any substantial question of law arising in this appeal and 
 there is no doubt about the correctness of the conclusion arrived by the 
 Tribunal. 
 The second issue is with regard to prior period expenses of Rs. 
 5,51,337/-.         Insofar as this is concerned, the Tribunal has found that 
 . 
 . 
 the amount got crystallized in the relevant accounting year and that was also 
 the year in which payments were made.   Since the liability got crystallized in 
 the relevant accounting year, the Tribunal was of the view that the prior period 
 expenses could not have been disallowed. 
 In our opinion, there is no error in the view taken by the Tribunal in 
 this regard. 
 No substantial question of law arises in the appeal. 
 The appeal is dismissed. 
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 MADAN B. LOKUR, J 
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 MAY 29, 2008                                   MANMOHAN SINGH, J 
 SD 
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 ITA 586/2008                                                 Page no. 3 of 3