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TMI Blog2002 (8) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, 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?" - We answer both the questions in the negative, i.e., in favour of the Revenue and against the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ding Rs. 50 should be allowed or not in view of the provisions of section 37(2A) of the Act, an issue similar to this has been considered by us in the case of Modern Threads (India) Ltd. v. CIT [2002] 258 ITR 511 in D. B. I. T. R. No. 2 of 1993, decided on March 6, 2002, wherein we answered the question in favour of the Revenue and against the assessee. The facts relating to question No. 2 are that the assessee incurred expenses on maintenance of the guest-house and also paid rent for the building used as guest- house. The Income-tax Officer disallowed the claim of the assessee invoking the provisions of section 37(4) of the Income-tax Act, 1961, and that view has been confirmed by the Commissioner of Income-tax (Appeals). In appeal bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we answer the question referred in the negative and in favour of the Revenue." The Madhya Pradesh High Court has also considered this issue in the case of Hindustan Electro Graphites Ltd. v. CIT [2000] 258 ITR 518 (Appendix). The Madhya Pradesh High Court has taken the view that sub-section (4) of section 37 starts with a non obstante clause and when there is a special provision for guest house, the expenses on the guest house under section 30 cannot be allowed. Expenses on the maintenance of guest house are hit by subsection (4) of section 37, as they are special provisions and they prevail over the general provisions of section 30 of the Act. In the case of United Catalysts India Ltd. v. CIT [1998] 229 ITR 233, the Kerala High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed under sub-section (1) of section 37 of the Act of 1961. Sub-section (3) of section 37 provides that notwithstanding anything contained in sub-section (1), any expenditure incurred by an assessee after the March 31, 1964, on advertisement or on maintenance of any residential accommodation including any accommodation in the nature of a guest-house is to be allowed as deduction. Sub-section (4) of section 37 provides that notwithstanding anything contained in sub-section (1) or sub-section (3), no expenses shall be allowed in respect of any expenditure incurred by the assessee after February 28, 1970, on the maintenance of any residential accommodation in the nature of a guesthouse (such residential accommodation being hereafte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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