9911796707
TMI Blog1994 (11) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... that the expenditure of Rs. 10,029 as maintenance expenses and Rs. 11,375 as depreciation allowance, for the assessment year 1977-78 in relation to the flats at Jupiter Apartments and Sunita Apartments, was not expenditure incurred on the maintenance of residential accommodation in the nature of a guest house, and was, therefore, an admissible deduction?" The assessee is a private limited company. In the assessment year 1977-78, the assessee claimed maintenance expenses of Rs. 10,029 and depreciation of Rs. 11,375 on flats bearing Nos. 163 and 164 in Jupiter Apartments and one flat in Sunita Apartments at Cuffe Parade, Bombay. The Income-tax Officer allowed these claims treating these flats as not in the nature of guest houses. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Dr. Balasubramaniam, these flats belonging to the assessee should have been treated as guest houses of the assessee-company. The facts not in dispute are as follows : (i) the assessee-company owned these flats in the relevant assessment year ; (ii) the assessee-company incurred expenditure on maintenance of these flats which amount along with the depreciation was claimed as allowance by the assessee-company during the assessment year 1977-78 ; (iii) in the course of the assessee's business, the shipping crew and representatives of non-resident shipping companies having dealings with the assessee-company were put up in these flats ; and (iv) the assessee-company's own directors or employees had not used these flats as their r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial 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." This sub-section was inserted by the Finance Act, 1970, with effect from April 1, 1970, which prohibits totally any allowance under this section in respect of any expenditure on the maintenance of a guest house incurred after the 28th day of February, 1970, and further prohibits any depreciation allowance in respect of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and entertained gratuitously or at a concessional rate. Moreover, sub-section (5) to section 37 of the Act which has been inserted by the Finance Act, 1983, with retrospective effect from April 1, 1979, has clarified that accommodation maintained by the assessee to provide lodging or boarding and lodging to any person including any employee or a director or the holder of any office in the assessee-company would be in the nature of a guest house within the meaning of sub-section (4) of section 37 of the Act. This supports the submission made by Dr. Balasubramaniam to the effect that these flats were in the nature of guest houses of the assessee-company. Taking the totality of the circumstances into consideration, in our view, by providi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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