TMI Blog2017 (1) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... cation 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while on leave ? 3. The brief facts relevant to the issue between parties are as follows : The Applicant Assessee is a body corporate employing more than 100 persons. It is the case of the Applicant that the Applicant had paid a sum of ₹ 57,650/- to ITC Ltd. to reserve accommodation for 366 days during the assessment year 1984-85 for use by their employees, who are on leave. They sought deduction of the said amount towards maintenance of the guest house as contemplated under Section 37(4) of the Income Tax Act, 1961 (the 'Act'). 4. In the case of Reference No.42 of 2000 the amount paid was ₹ 40,000/- during the assessment year 1985-86. In Appeal before the Commissioner of Income Tax (Appeals) [CIT (A)] it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plated maintenance of such guest house as holiday home and complied with Section 37(4)(1) and the amount paid for maintenance for residential accommodation is in the nature of guest house. Mr.Surve further points out that as far as Section 37(5) was concerned, the same was not at all attracted, in view of the fact that Section 37(5) contemplated accommodation by whatever name called it was maintained, hired or reserved for the purpose of providing boarding and/or lodging to any person including any employee on tour or a visit. Thus, it is contention of Mr.Surve that the Applicant's case squarely fall within Section 37(4) and not under Section 37(5) and he, therefore, submitted to the question referred may be answered in the negative. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the nature of a guest house shall include accommodation hired or reserved by the assessee in a hotel for a period exceeding one hundred and eighty-two days during the previous year; and (ii) the expenditure incurred on the maintenance of a guest house shall, in a case where the residential accommodation has been hired by the assessee, include also the rent paid in respect of such accommodation. (5) For the removal of doubts, it is hereby declared that any accommodation, by whatever name called, maintained, hired, reserved or otherwise arranged by the assessee for the purpose of providing lodging or boarding and lodging to any person (including any employee or, where the assessee is a company, also any director of, or the ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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