TMI Blog1991 (11) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... was not liable to be disallowed under section 37(2B) of the Income-tax Act ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that the sum of Rs. 23,022 incurred as staff house expenses by the assessee was not liable to be disallowed ? The assessee is a public limited company manufacturing different articles, namely, cotton textiles, carbide, calcium, caustic soda, P. V. C. articles, etc., and the assessment year under reference is 1973-74, the year of account being the financial year ending on March 31, 1973. The assessee incurred an expenditure of Rs. 40,651 in serving tea and cool drinks to its customers and claimed deduction of the same as 'business expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he affirmative and against the Revenue. So far as question No. 2 is concerned, the facts are as follows: The assessee had incurred an expenditure of Rs. 23,022 for the guest house where staff members were permitted to stay whenever on duty. Out of the said expenditure, expenditure of Rs. 19,200 was incurred in payment of rent for the premises used as guest-house for the employees and Rs. 539 for obtaining water connection therein. No details were furnished for the balance of expenditure of Rs. 3,283. The assessee claimed deduction of the said expenditure. The Income-tax Officer, however, without assigning any reasons disallowed deduction of the said expenditure. In the appeal preferred by the assessee, the Appellate Assistant Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curred by the assessee after February 28, 1970, for the maintenance of any residential accommodation in the nature of guest house is not an allowable deduction. Section 37(4), in so far as it is relevant, reads as follows : " 37(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 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urance for premises, used for the purposes of the business or profession, the following deductions shall be allowed : (a) where the premises are occupied by the assessee (i) as a tenant, the rent paid for such premises ; and further if he has undertaken to bear the cost of repairs to the premises, the amount paid on account of such repairs ; (ii) otherwise than as a tenant, the amount paid by him on account of current repairs to the premises ; (b) any sums paid on account of land revenue, local rates or municipal taxes ; (c) the amount of any premium paid in respect of insurance against risk of damage or destruction of the premises." The assessee is, admittedly, a tenant of the premises which are described as residential accommodati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts guest house. The assessee claimed deduction of half of the sum paid as rent and also the amount spent on repair of the furniture and on the maintenance of the guest house. The Income-tax Officer rejected the claims and this was confirmed by the Appellate Assistant Commissioner. It was contended before the Tribunal that the expenditure relating to the maintenance of the guest house amounting to Rs. 9,156.90 was covered by section 37(1) of the Income-tax Act, 1961. It was, however, reiterated that even that expenditure was not disallowable as it was not really necessary for the assessee to maintain a register in terms of rule 6C(3) of the Income-tax Rules, 1962, in view of the fact that no directors or employees of the company had ever sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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