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2017 (1) TMI 725 - HC - Income TaxDisallowance under Section 37(5) - payments made to Welcome Group of hotels under the executive holiday plan whereunder the assessee booked accommodation for 366 days for use of its employee while on leave - Held that:- The insertion of sub-section (5) into section 37 was only to restrict the application of sub-section (4) of section 37 to lodging or boarding provided to any person when he is on a tour or a visit to a place. It does not cover use of the guest house used by employees while on leave which are considered to be holiday home. Therefore, sub-section 5 of section 37 of the Act would have no application when the guest house is being used as holiday home i.e. for exclusive use of employees on leave. The words “while on leave” is absent in sub-section 5 of section 37 and restricts the use of accommodation to be considered as a guest house when used by the employees on a tour or a visit to a place where such accommodation is situated. Therefore, sub-section 5 of Section 37 of the Act can have no application when the guest house is used as a holiday home as defined in second proviso to section 37(4) of the Act. Tribunal was not correct in invoking sub-section 5 of Section 37 to deny the benefit of the second proviso to section 37(4) of the Act available to the applicant assessee. This is so as section 37(5) of the Act will not apply to the cases covered by the second proviso to section 37(4) of the Act. - Decided in favour of assessee and against the respondent Revenue.
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