D.b. Income Tax Appeal v. M/S Hindustan Zinc Ltd

D.B. INCOME TAX APPEAL NO.64/2002(Commissioner of Income Tax Vs. M/s Hindustan Zinc Ltd.) Date of order : 14.12.2006 HON'BLE MR. JUSTICE RAJESH BALIAHON'BLE MR. JUSTICE GOPAL KRISHAN VYAS Mr. K.K. Bissa, for the appellant.Mr. Anjay Kothari, for the respondent. The appeal relates to assessment year 1982-83and the following substantial question has been raisedfor consideration in this appeal : “Whether on the fact and in thecircumstances of the case the Ld. ITAT wasjustified in upholding the order of Ld. CIT(A)reducingthedisallowancefromRs.1,50,000/0 made by the AO in respect ofexpenditure on guest house to Rs.17,200/-even though the expenses allowed are notallowable under the specific provision ofSection 37(4) and 37(5) of the I.T. Act.?” Before the assessing authority, the assessee has claimed that the building in question is not aguest house but an accommodation hired as a transitaccommodation for employees and Rs. 1,50,298/- wereattributable for rent payable for such accommodationwhile assessing officer had disallowed the entireclaim of deduction by the assessee for the expensesincurred on so-called transit accommodation. On appeal, the CIT (Appeals) restricted thedisallowanceandallowedthedeductionofRs.1,32,712/- by considering it to be rent paid forhiring the transit accommodation, which cannot betermed as expenses for maintaining the guest-house. The order of the CIT (Appeals) was affirmedby the Tribunal. For the assessment year 1982-83separate reasoning was not provided but it followedthe decision rendered for the assessment year 1991-92by the CIT (Appeals) as well as by the Tribunal. The question is now no more res-integra andhas finally been settled by Hon'ble Supreme Court inBritannia Industries Ltd. Vs. Commissioner of IncomeTax & Anr., reported in (2005) 278 ITR 546 (SC). TheHon'ble Supreme Court considering the specialprovisions made for the purpose of disallowing theexpenses incurred for the maintenance of guest-houseunder Section 37 (4) and subsequent amendment in theSection brought into effect retrospectively w.e.f.1.4.1979, which covers the period in question and alsoconsidering the contention that since Section 37 (4)does not operate on the deduction governed by Sections30 and 36 of the Act of 1961, applied the principlethat special provisions enacted excludes theapplicability of the general provision and held asunder : “While the expression “premisesand buildings” in sections 30 and 32 ofthe Income-tax Act, 1961, and theexpression“residentialaccommodationincluding any accommodation in the natureof guest house” in sub-sections (3), (4)and (5) of section 37 can be similarlyinterpreted, a distinction has been soughtto be introduced for the purpose ofsection 37 by specifying the nature ofbuilding to be a guest house. Theintention of the Legislature is clear andunambiguous : the intention was to excludefrom deduction the expenses towards rents,repairsandalsomaintenanceofpremises/accommodation used for thepurpose of a guest house of the natureindicated in sub-section (4) of section37. If the Legislature had intended thatdeduction would be allowable in respect ofall types of buildings/accommodation usedfor the purpose of the business orprofession, then the Legislature would nothave felt the need to amend the provisionsof section 37 so as to make a definitedistinction with regard to buildings usedas guest houses as defined in section 37(5) and the provisions of sections 31 and32 would have been sufficient for thatpurpose. When the language of a statuteis clear and unambiguous, the courts areto interpret the same in its literal senseand not to give a meaning which wouldcause violence to the provisions of thestatute.” When the language of a statuteis clear and unambiguous, the courts areto interpret the same in its literal senseand not to give a meaning which wouldcause violence to the provisions of thestatute.” In view of the aforesaid, it must be heldthat the Tribunal was in error in allowing thededuction in respect of the rent paid for residentialaccommodation hired for the purposes of housing theofficers on transit. Accordingly, the appeal is allowed. Theorder of the Tribunal and CIT (Appeals) relating tothe assessment year 1982-83 in regard to allowance of arun expenses incurred by way of rent for hiring guesthouse are set aside and the order passed by theassessing officer is restored. No costs. (GOPAL KRISHAN VYAS), J. (RAJESH BALIA), J.