TaxTMI 
TaxTMI 
TaxTMI 
2017 (1) TMI 725
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....nd in the circumstances of the case, the Tribunal was justified in upholding the disallowance under Section 37(5) of Rs. 57,560/- made by the Assessing Officer in respect of 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 ? Question of law in Income Tax Reference No.42 of 2000 : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the disallowance under Section 37(5) of Rs. 40,000/- made by the Assessing Officer in respect of payments made to Welcome Group of hotels under the executive holiday plan whereunder the assessee booked accommodation for 230 days for use of ....
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....the applicant was rejected and the order of the Assessing Officer was restored. The question has thereafter been referred to this Court. 5. Mr.Surve, learned counsel appearing on behalf of the Applicant while urging the Applicant's case states that the provisions of Section 37(4) and the second proviso was applicable in terms and as such, both conditions of the second proviso read with Explanation 1, which permits residential accommodation in the nature of guest house shall include accommodation hired or reserved by the assessee in a hotel for a period exceeding 182 days during the previous year, would be construed as accommodation in the nature of "guest house" and, therefore, was in compliance with the second proviso which contemplat....
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.... the expenditure referred to in clause (i) and the amount of any depreciation referred to in clause (ii) shall, for the purposes of this sub-section, be reduced by the amount, if any, received from persons using the guest house : Provided further that nothing in this sub-section shall apply in relation to any guest house maintained as a holiday home if such guest house - (a) is maintained by an assessee who has throughout the previous year employed not less than one hundred wholetime employees in a business or profession carried on by him; and (b) is intended for the exclusive use of such employees while on leave. Explanation. - For the purposes of this subsection, - (i) residential accommodation in the nature of a guest hous....
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....est house, if the guest house is intended for use of its employees while on leave. Sub-section 5 of Section 37 of the Act clarifies that any accommodation by whatever name called, would be considered to be a guest house within the meaning of sub-section 4 of Section 37 of the Act. However, sub-section 5 of section 37 cannot / does not render ineffective the second proviso to section 37(4) of the Act. If it was the intention of the Parliament to render the second proviso, redundant / ineffective, then at the time when it introduced subsection 5 to Section 37 of the Act, the second proviso to sub-section 4 of Section 37 of the Act would itself have been deleted from the Act. The insertion of sub-section (5) into section 37 was only to restric....