TMI Blog2010 (2) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... such transit accommodation are not deductible. - 142 of 2005 - - - Dated:- 25-2-2010 - MANJUNATH K. L., NAGARATHNA B. V. MRS. JJ. M.V. Seshachala for the appellant. Smt. Vani for the respondent. JUDGMENT The judgment of the court was delivered by K. L. Manjunath J.- The Revenue has come up in this appeal challenging the order passed by the Commissioner of Income-tax (Appeals), Bangalore, which has been confirmed by the Income-tax Appellate Tribunal, Bangalore, in I. T. A. No. 683/Bang/2000 dated May 28, 2004 raising the following substantial question of law : "Whether the appellate authorities were correct in holding that transit house maintenance expense is an allowable deduction despite the Assessing Officer havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s incurred by the assessee to maintain the transit accommodation has been considered by the Commissioner of Income-tax (Appeals) and the Tribunal as it falls under section 37(4) and (5) of the Income-tax Act and such accommodation ought to be treated as guest house expenditure. Relying upon the judgment of the Supreme Court in Britannia Industries Ltd. v. CIT [2005] 278 ITR 546, the learned counsel for the Revenue contends that the expression "guest house" includes the residential accommodation. Therefore, any expenditure incurred by the assessee towards the maintenance of the transit residential house has to be treated as a guest house and not liable for deduction. Therefore, he requests this court to set aside the orders passed by the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsider the provisions of section 37(4) and (5) of the Income-tax Act as it was earlier. "(4) Notwithstanding anything contained in sub-section (1) or sub-section (3),- (i) no allowance shall be made in respect of any expenditure incurred by the assessee after the 28th day of February, 1970, on the maintenance of any residential accommodation in the nature of a guest house (such residential accommodation being hereafter in this sub-section referred to as guest house) ; (ii) in relation to the assessment year, commencing on the 1st day of April, 1971, or any subsequent assessment year, no allowance shall be made in respect of depreciation of any building used as a guest house or depreciation of any assets in a guest house : Provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curred for the maintenance of the residential accommodation in the nature of guest house. 9. Now, the contention of the assessee before us is that it is a transitional accommodation provided to its employees and, therefore, such premises cannot be categorised as a guest house and holiday home and, therefore, the assessee is entitled to seek deduction. In order to appreciate how the premises in question is being used has to be considered by us in order to consider the case of the assessee whether it would fall under section 37(5) of the Income-tax Act or not ? 10. Upon reading of sub-section (5) of section 37 of the Income-tax Act, it is clear to us that even if an employee on tour or visit to a place, at which such accommodation is situ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en inserted under the Finance Act, 1983 with retrospective effect from April, 1979, but they have not considered how section 37(5) of the Income-tax Act would not be attracted and if such premises are used as and when the employees of the assessee visit the place of business and use the accommodation provided by the assessee in order to hold that expenses incurred for such accommodation is an allowable deduction. According to us, the provisions of section 37(5) of the Income-tax Act has not been fully considered by the Bombay High Court except making reference in the course of the judgment. In the circumstances, we are of the view that the judgment relied upon by the asses-see is of no application. In view of our discussion, we are of the v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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