2002 (9) TMI 71 - HC - Income Tax

Whether, on the facts and in the circumstances of the case and having regard to the provisions of Explanation (ii) to the second proviso to section 37(4) of the Income-tax Act, the Tribunal is right in law in holding that lease rent paid for guest house cannot be disallowed under section 37(4) of the Income-tax Act, 1961? Our answer to the question, therefore, is in favour of the assessee and against the Revenue.

Summary

The High Court of Madras ruled that lease rent paid for a guest house cannot be disallowed under section 37(4) of the Income-tax Act, 1961. The court found that the rent paid for the guest house is not considered maintenance and is allowed as a deduction under section 30. The judgment favored the assessee over the Revenue for the assessment year 1984-85.