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TMI Blog1994 (12) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned therein. The decision of CIT v. Chase Bright Steel Ltd. (No. 1) [1989] 177 ITR 124 as well 128 (Bom.) had since been differed from by their Lordships of Calcutta High Court in the case of Kesoram Industries Cotton Mills Ltd v. CIT [1991] 191 ITR 518 and CIT v. Upper Ganges Sugar Mills Ltd [1994] 206 ITR 215 (Cal.). Their Lordships of Bombay High Court while deciding the issue in the case of Chase Bright Steel Ltd. did not take into consideration the provisions of section 37(5) of the Act. In case sub-sections (4) and (5) are read with sub-sections (1) and (3) of section 37 of the Act, the only possible conclusion would be that the expenditure on guest house is not allowable. 29. Opposing the stand taken by the learned DR, the learned AR heavily relied on the decision of the Bombay High Court in the case of Chase Bright Steel Ltd which according to him, has since been followed by the various Benches of the ITAT. It was submitted that this decision was also considered by their Lordships of Gujarat High Court in the case of CIT v. Kaira Distt. Co-operative Milk Producers Union Ltd [1991] 192 ITR 608. They followed their earlier decision rendered in the case of CIT v. Pat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not falling to be considered under section 37(1) of the Act, we are in agreement with the view taken by the Tribunal that the deduction in respect of rent for the guest house being allowable and allowed under section 30 and the expenses on repairs and polishing of furniture being allowable and allowed under section 31 of the Act would not be disallowed under the provision of sub-section (3) of section 37 of the Act or rules made thereunder." 31. "As regards the remaining expenses since the same falls to be considered under section 37(1) only, the provisions of section 37(3) are not attracted." This view was again reiterated in the case of Chase Bright Steel Ltd. The assessment years were 1968-69 and 1969-70. In case of Kaira Distt. Co-operative Milk Producers Union Ltd, their Lordships of Gujarat High Court reiterated the same view as taken by the Bombay High Court. It was held that the deduction in respect of rent which is covered under section 30, cannot be disallowed under section 37(4) of the Act. The Calcutta High Court in the case of Kesoram Industries Cotton Mills Ltd on the other hand while considering the provisions of section 37(4) of the Act, have held as under :-- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em if it is reasonably possible to do so, and to avoid repugnancy. If there are two conflicting provisions in the same section or clause, the courts should find out which of the two provisions is more general and which is more specific and construe the more general one as to exclude the more specific. The principle is expressed in the maxim generalia specialibus non derogant and generalibus specialia derogant. If a special provision is made on a certain subject-matter, that matter is excluded from the general provision." The intention of the Legislature on the other hand could be gathered from the history of the provisions of sub-sections (3),(4) and (1) of section 37 of the Act. Till 28th February, 1970, the expenditure incurred on the maintenance of guest house was allowed as a deduction in computing the profits and gains of business or profession. This was however subject to certain limits and conditions prescribed in Rule 6C of the Income-tax Rules, 1962. The rule covers expenditure on guest house maintained at the principal place of the business or profession in India, any place where the assessee had an establishment employing not less than 50 whole-time employees throughou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 whole-time employees in a business or profession carried on by him ; and (b) is intended for the exclusive use of employees while on leave. Explanation : For the purposes of this sub-section-- (i) residential accommodation in the nature of a guest house shall, include accommodation hired or reserved by the assessee in a hotel for a period exceeding one hundred and eighty-two days during the previous year ; and (ii) the expenditure incurred on the maintenance of a guest house shall, in a case where the residential accommodation has been hired by the assessee, include also the rent paid in respect of such accommodation. (5) For the removal of doubts, it is hereby declared that any accommodation, by whatever name called, maintai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncture we may also refer to the observation of Lord Evershed, MR as given in '79' Eastbourne Corpn. v. Forbes Ltd [1959] 2 All ER 102 (CA) p. 107 as appear in the book of Principles of Statutory Interpretation by Justice G.P. Singh (p. 88) that " It is no doubt true that if two sections of an Act of Parliament are in truth irreconciliable than prima facie, latter will be preferred. But these are arguments of the last resort. The duty of the Court must be, if the result is fairly possible, to give effect to the whole expression of the parliamentary intention ". As stated earlier if viewed in the light of intention of the legislature the deduction in respect of rent and depreciation is not allowable as per provisions of section 37(4) and (5) of the Act. In this context, we would also like to mention that in all the decisions, sub-section (5) of section 37 of the Act was never considered by the High Courts. As mentioned earlier in the case of Chase Bright Steel Ltd, the relevant assessment years were 1968-69 and 1969-70, wherein Rule 6C was also under consideration. In the case of Kaira Distt. Co-operative Milk Producers Union Ltd, though sub-section (4) of section 37 was discussed, s ..... 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