Per Shri S.K. Chander, Accountant Member - These appeals are at the instance of the assessee. They relate to the assessment years 1980-81 and 1981-82. The common and the only issue involved in these appeals is : whether, on the facts and in the circumstances of the case, the expenditure incurred by the assessee on cost of tickets issued free falls within the ambit of section 37(2A) of the Income-tax Act, 1961 (‘the Act’).

2. We have heard the parties. The assessee is a private limited company and, inter alia, carries on the business of exhibition of films. The assessee’s books of account for this business are maintained on mercantile system of accounting. The previous year followed is the year ending 30th September. For the assessment years under appeal, the return of income was filed on 16-6-1980 and 27-6-1980 respectively. This return in each year was accompanied with the statements of accounts as on 30-9-1979 and 30-9-1980 respectively.

3. During the course of process of Assessment, the ITO noticed that the assessee had debited to the profit and loss account for these two years an amount of Rs. 5,966.77 and Rs. 5,234.34 under the head ‘Entertainment’. The ITO, therefore, cons