Rama Jois, J.—Pursuant to the direction given by this court in C.P.Nos. 44 to 46 of 1975, the Income Tax Appellate Tribunal, Bangalore Bench, has referred the following question for the opinion of this court :

"Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the expenses incurred by the assessee on refreshments, lunch, liquor, etc., served at the meetings of stewards, managing committee members and other office bearers and officials as well as general body meetings, do not constitute expenditure in the nature of entertainment expenditure within the meaning of section 37(2A) of the Income Tax Act, 1961, for the assessment years 1968-69, 1969-70 and 1970-71 ?"

2. The assessee is a company. Its business is to conduct horse races. It has 190 members. The assessment years are 1968-69, 1969-70 and 1970-71. During the previous years, relevant to the assessment years, the total expenditure for the three years are as follows :

Sl. No.

Assessment year

Amount Rs.

1.

1968-69

59,780

2.

1969-70

69,035

3.

1970-71

1,40,278

3. The break-up of the expenditure was also furnished. The figures included expenditure incurred for the supply of refreshments, lun