2000 (12) TMI 43

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....ary for working out the disallowance under section 40A(5) for the assessment years 1983-84 and 1984-85? (ii) that travelling allowance considered to be in excess of the limits under rule 6D of the Income-tax Rules is not liable as deduction for the assessment years 1983-84 and 1984-85? (iii) and upholding the disallowance of depreciation amounting to Rs. 4,40,029 for the assessment year 1983-84?" As far as the expenditure in the first question, viz., medical reimbursement and house rent allowance are concerned, they have got to be treated as part of salary and the assessee cannot have exemption under section 40A(5) of the Income-tax Act, 1961. In fact, this question has already been answered by this court in Sundaram Clayton Ltd v.....

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.... a club by the various employees of the company may be for the personal benefit of such employee or employees, in the sense of enjoying amenities and facilities provided by the club, either in the form of recreation or sports activities. That sort of membership may not be having any correlation to the legitimate needs of the company." It has also been held that the expenditure incurred by the assessee-company by payment of club subscriptions to various employees cannot fall within the permissible deduction prescribed under section 40A(5) of the Income-tax Act. Therefore, this question is answered against the assessee and in favour of the Revenue (sic). The second question, i.e., deduction claimed in respect of travelling allowance, it....

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.... that they can almost be equated to the comforts available in a luxury hotel. That however, does not lead to the conclusion that a person is deemed to be staying in a hotel even while he is travelling or that he is deemed to be travelling even he is in hotel, using the word 'travel' in narrow sense. That word has been used in a wider sense in the statutory provisions." The question has also been answered in favour of the Revenue and against the assessee. Applying the ratio of the said decision, we also answer this question in favour of the Revenue and against the assessee. The third question is as to whether the Tribunal is right in upholding the disallowance of the depreciation amounting to Rs. 4,40,029 for the assessment year 1983-8....