TaxTMI 
TaxTMI 
2005 (7) TMI 82
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.... case, the expenditure incurred on maintenance of the transit quarter at Car-michael Road, Bombay, for accommodating its employees visiting Bombay from outstations for the purposes of business could be disallowed under section 37(4) of the Income-tax Act, 1961, treating it as a guest house?" In the above case, the Income-tax Officer had held that the expenditure incurred on salary, general maintenance, repairs, electricity, gas and on eatables and provisions in the guest house was disallowable under section 37(4) of the Income-tax Act, 1961. The assessee-company had rented the premises at Carmichael Road, Bombay, for Rs. 24,000 per annum. Admittedly, the premises were not used as a holiday home for the employees. The place was used fo....
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....CIT [1995] 212 ITR 175, holding that under section 37(4)(i) of the Income-tax Act, no allowance shall be made in respect of any expenditure incurred by an assessee on maintenance of any residential accommodation in the nature of a guest house after February 28, 1970, and since the assessment year in question is 1986-87, the same was not allowed. Reliance was placed on the decision of the Gujarat High Court in the case of CIT v. Gujarat Industrial Development Corporation reported in [2001] 170 CTR 19, wherein the court observed as follows: "Any accommodation exclusively used by the assessee for the purpose of providing accommodation to its employees during their visit on official tour cannot be considered as guest-house for the purpose of....
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....ed to maintain an accommodation exclusively to be used by the employees while they are on duty and not otherwise was not intended to be brought within the purview of sub-section (4) of section 37. In the aforesaid circumstances, on the premises that the accommodation was available exclusively for the purpose of its employees while they were on duty in Bombay, the Tribunal was justified in its finding that the accommodation in question is not a guest house within the meaning of section 37(4)." Again, reference is made to the decision of this court in the case of CIT v. Ocean Carriers Pvt. Ltd. [1995] 211 ITR 357, wherein this court held as follows: "Sub-section (5) of section 37 of the Income-tax Act, 1961, which has been inserted by t....
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.... as it was for the purpose of business or profession under section 37(1) and not under section 37(4). Section 37(1) reads as follows: "Any expenditure (not being expenditure of the nature described in sections 30 to 36 and section 80W and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head 'Profits and gains of business or profession'." It is the case of the assessee that the transit quarters were being maintained exclusively for the purpose of the business of the company as they were meant for providing transit accommodation to its employees ....