D.M. Chandrashekhar, C.J.—At the instance of the revenue, the Income Tax Appellate Tribunal, Bangalore Bench (hereinafter referred to as "the Tribunal"), has referred under s. 256(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'), the following question of law:

"Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the expenditure incurred by the assessee in a sum of Rs. 20, 278 does not constitute expenditure in the nature of entertainment expenditure within the meaning of section 37(2B) of the Income Tax Act, 1961 ?"

2. In para 2 of the statement of the case the material facts have been set out. They are: The assessee is a banking company having more than one hundred branches. Its important customers who come to its head office and branches for transacting business were served with coffee or tea. During the year in question the total expenditure incurred on serving coffee and tea was only Rs. 20, 278. This works out at an average about Rs. 200 per branch per year.

3. The ITO disallowed such expenditure on the ground that it came within the ambit of sub-s. (2B) of s. 37, which reads:

"Notwithstanding an