TaxTMI 
TaxTMI 
2002 (8) TMI 87
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....nt expenditure? Whether, on the facts and in the circumstances of the case and in law, the Income-tax Appellate Tribunal was justified in holding that the provisions of section 37(4) of the Income-tax Act, 1961, start with a non obstante clause and cover only section 37(1) of the Income-tax Act and, therefore, they are not supposed to apply to any other provisions of the Income-tax Act and further holding that since the guest house rent was paid and allowed under section 30 of the Income-tax Act, 1961, the provisions of section 37(4) could not be read to disallow any rent payable by the assessee and thereby deleting the disallowance/addition of guest house rent of Rs. 2,39,980?" The assessee-company is engaged in the business of manuf....
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....placed reliance on the decision of the Bombay High Court in the case of CIT v. Chase Bright Steel Ltd. (No. 1) [1989] 177 ITR 124. Heard learned counsel for the parties. Before we go into the facts of the case, we would like to refer to various observations of the High Courts on this issue. In the case of CIT v. Ocean Carriers Pvt. Ltd. [1995] 211 ITR 357, the Bombay High Court has considered the issue whether expenses on maintenance of the guest house are allowable after February 28, 1970, and their Lordships observed as under: "Taking the totality of the circumstances into consideration, in our view, by providing accommodation to the members of the crew as also to representatives of the assessee's principal non-resident shipping ....
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....he decision of the Gujarat High Court in the case of CIT v. Ahmedabad Mfg. and Calico Printing Co. Ltd. [1992] 197 ITR 538 and have taken the view that the provisions of sub-section (4) of section 37 of the Income-tax Act are special provisions regarding disallowance of the expenses incurred on the guest house. Therefore, the expenses, which are specifically disallowed, cannot be allowed under the general provisions of section 30 of the Act. Section 30 of the Income-tax Act, 1961, allows the deduction of rent, where the premises are occupied by the assessee as a tenant and any expenses incurred for repairing of those premises, which have been taken on rent by the assessee. Sub-section (1) of section 37 contemplates that any expenditur....
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.... makes it clear that the rent allowable under section 30 is general in nature. The provisions of section 37(1) start with a non obstante clause and provide that any expenses, which are not covered under section 30 to section 36, that shall be allowed under section 37. Sub-section (3) has specifically allowed the expenses on a guest-house, which have been incurred after March 31, 1964. Sub-section (4) also starts with a non obstante clause and that provides that any expense incurred after February 28, 1970, on the maintenance of any residential accommodation in the nature of a guest house, that cannot be allowed. Sub-section (4) prohibits expenses incurred and allowable under sub-section (1) and sub-section (3) of section 37 of the Income-ta....