Karnataka High Court
The Commissioner Of Income Tax vs M/S Ibm India Ltd on 25 February, 2010
Bench: K.L.Manjunath, B.V.Nagarathna
. nawn-uwufi-I W-mmn-mm --man-gaunt "or mmmmm ' lama rsmwm' M ammmm "'2-mH'TCc? APPEAL AND 957 ASIDE me eaaea pmea a*¢%"?é4%eL% INCOME TAX APPELLATE TRIBUNAL, BANGALOR,EE"'BE!§irCj'-_i _ {N ITA P¢O.683lBI2GO0 DT.28.5.2m-4 C0NFIRFfi_i'£C§'ATTHE -- "
ORQER 0? THE APPEIJATE COMMIEIONER A_!'*a'3» THE GRSER PASSED 8'! THE .}OINT~C(}F-§MR;.4 OF _Ii¥é{_I£)¥v1Ew TAX. ASSESMENTS. SP1... RANGE-3,VBAh$§{i.C¥REA.ETC.' ms rm COMING on ma Haamwefk % K L mwumm 3', osuveneo %¢roLLcwm¢:% * Th: Revenue ms cqmmihggg if: chafknging the order Inannwe Tax (Appmk), ccmfirmed by the Incama 3_'ax__ .A)§'Av';$§:aVe!£.1_::u3'ta"~.;Vl'_':"'i!I:o__t:s'ce':I, Bangalore, in ma raising the fafiowinq vsuwtafjgiai quasatien_ ¢::f £31}: :¥ X 1 'v.. "%?£:§}'.*her cm Appezm mmrm were ._ hofiing tact tram!' {mm A exmsm 5 an aibwabie mph the fl%k:g Gfificer bavmg 'Timid that me same: am 3 yaw harm whit?! arm nae 9399131313 under semn 37(4) and 32(5) oftirezficat?'
2. The fads tending ta fizis appeal are as heraursdar ;-r Tha amasmfiomnany flied Es raters: ef imam: far we asmsmsnt year 1996-91 II: are mtzarn af insonte 5::
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mmmw mm .= », mm «-
was-mrvw-va av W,.,, Wtw. WWW wwmmummamxwwa nuwm WWW W mmmmm mm Wm;-a" mt mxmmm mesa mam' M Hmwmnm mm; cc chimed a cseauctsm of Rs. 19,51,253/-~ being an h Encurrad by it in respxt of tha tra:-{sit accofi:ia:§od¢fik§5 provwed to im employm. Contandir:g""t?:at the V 1 acmmrrmation claimed by thug -in: nature of a guwb-houw, thus £ha ass5§s飧§V"'ui!a'fis disalfiawad. Being aggrisvefi; by..i£§1viF"L_;c's?76ef of Bwawfiont, axe swam: filed an 3i1%l:::I 'v:.(:#:.3.f¥t;§'!§8S§0B8r of Incoma Tart allowed in rwpect cs!' figa" addition caf Rs.1G,61,2S.3_!§:' '~~fE§.fig: 'fitsagsee in rmwt of sxpendftL;'na_ maintenance of transit accommodat§:m_Vtu. Being aggrisved by the _.a,{d¢r i;§f¢a_m£drm......T&x (Apmais), Bangalore, dated prafmw an appear befora the V Tr-iburtai, Ba:-tgaiare. The incarm Tm: "?.:jf!2'£§'§:1a! aim cssmirred with the vfiws cf the 4 : '"44¢§§i:r:is§i§§ar of Income Tax (Apaeais). Accordingiv, fin Qua disrriswd. Being aggriawd by the concumant L A 'firidings of tho orders passed by aw Commissianor of Tax alspmais} and tha Incorrza Tax Appeitabe Tribursai, the prawn: apgeai is fimd. fiv mmame-us. ac ma mmmuvmummm MEWM mwum SJ!" KAKNR3Ffi.3%»
3. The main cententim of tho appanant bafors ugigfi ma expensa incurred by the am% as mmsit accommodation has V Commissiener cf Income Tax (A;3peal:§)V_a:i'i§dA' it felts under Semen 3?(4) and» 9f tfii and such acccmmodafion .§u9h,t;- * ' V as» guest houses expenditure. of the Supreme Court in.jfiarrhgpihifiégi:::I§d§i}°';'§T§;§§iE;.§.V"V'LTD -- vs - cosvauxssromm%%<2ré%%%L:§:;;oa§§j%'rAx%'a£«A!§R§%%A{2oa5) 278 rm 546 Revenue ccnaands, that the includw than rwidermm accnmtvtodatiizsg nxpanditure incurred by um§¥ar{:¥Vs§____Athe rmintenanca crf the transit has be he mm as a gumt-hauae and V 239% Therafsera, he I-mafia this Caurt Vv to sat &s..ié# orders pawd by the Cammissicmer af ' s{Apwa£s) and five Tribmai by smattering the of law in fasrozzr af the Revenue.
Per cant:-3, flue iaamw caurzsal for the mam, centersds mat the garemim mainmrsed by fine assamee as a Q-ansimry aacamnscdatim be 1% ampmyaes ca:-insst ha gg/M, wwwaarw x x V thg '3:
at as aanhempiataad wider Sec&n 37(4) ané .m..w.,.WV,.g..& W mmmmm WW WW" W Mmmmm wmm Wm-ar W mammmm mm mam? W MWMMA aim M aquabud as a unfit 'how: and that tha assassa is not mairmining the uansitory a<:z:on*a'.§f§*&ac:da::ts5%:9§ he anhertain are guest and it k a:hx)"'i'1ar« V such rmidazmal premises aura also r;ét__ as} Mme its ordur be distinguish fi1i &¥ 5§--gV£.:%af'_asV:E-- :l"'{O 'L't8sjo or holiday human. ':j:2r:.1._I:ar13<Ai's"-'.:!aa'3§: than Commisswrnar of Inccrrvc"""i'A§_:_x gait as the Tribunai ware ju§&ii§d_ in ;j'i$t_ igmvai-we of the Revenue rejected the ccnheac¥ons--«co£'VA"§:!';a} §z " circurrsbance, she revquesw Qt; apwai.
5: Hayréé§; g1V:fIeaxrd V flre ;§;:s1ml for the partiu, we have ta 'c9%:§Vi'é~3,r ma raidarstia! pnernisw mawcained by Vsvéithin the definition as? a gum-hause ti? inf L3}: Viizcerns Tax Act, If fix: pzremims maintained by 'rfiihéandentmwnw fafb wffizin the category of guest " or a haliday home, than tbs court has he answar the at law in favaur of me Reverrua and if the premises My under a diflerant camgary, then, in such cirwmmzcei the apnea! has m be rajacwé. gu'// »#"Q'atI7'?\\l|'<'>X\ :%§..M§'.u're5: f\':\"(¢%='v\:V\\1\nra>.w~.ww w .. vfiv
6. Ir; order to appruciahs an cave :3!' my partm, 2 has apprapriatae tn amsider the pravaiorzs at' and (S) as' the Income Tax Act as it 1nysx§"ea«r!§_eL§. _ ] (4) Motwx-rmngmg section (1 ) ar sub-section (3) no afiwanw of any axpcndmrt aim' we 23* fis5*3{_ f.'af ¥Fe.§rsV;'ary:.':""§"3?.9§.T' an we :::a#:te:1;an§:a_:_ Vdf-gay :i1¢Is;}e§e:1£'§a§,_ag::ammadotIan In (ma mummy 7 In £133 sub» mwfi %*'¢fé??'¢5'£'=! heme 3;
(:3) awammant year;
_ wmmmm cum 2" day of April, 297:, or a:':y __ aa-amsmant year, no va§awa::?ce> Vébéif. made in zmmct of édeprecléfica.-._'§§-sééay bufidlng med m 3 guw'-
' " qr dégfacmrn afaay ww In a germ'-
w« W wfg~%.m§§u Wm" m«»m.wmmnm mmm mmamn WE" KA§v:Nm'K-9:.Wx HME-H azfmum' 0% MARNRTAKA MGM COURT 0% KARN&;i"mm mm-3 cm that the aggragafie of the referred to In chm (£3 and we amount 91' my depracafion mfarred to fir:
U & ev=\¢-h an mam (I9 sits}; for the gurpom «sf :55 mg» sexist: ha reduced 5;! the amount, 3! my, received frag: petmns wing we gawk' ham; g"yy/ awn-m wwwm-s war nnmiummmwm Wawn- wwvwfii-w.¢rw fi%Mm8VMaMRM- hiwm WWUKI %J!"'i§.il1l€PMflUE.aRififl"¥"'§l%:?H'€e§%3UK'E'$J!" §§MKNfl.f'§?fl'Kfl Wfififl €.:Q§§&Y'm$ mflflmfivflfifi (8) (5) Provided further that nwwng in tzim sub- sectahn shall apply in relation to any game Pram maintained as av holiday guwmwhaccsve -~ £8 maintained by an thmugbaut the preview year etfigiaygd ' "
Aeess than me hundred 'gfigfbygm In a buslzwm or prafmmi"
is intended such emp!ayeas.w!:i£e:'A'¢h "
"{5} doubts, 3 is hereby "" "gay aacarrzmcdatém, by . _ii$!:.fi{w§Ir*~._._::ame cailuaf, mainmfmcf, himd, a§r_j.. atfzerwbe arranged by the ij'!ié':?V the parrpcw ef pmvfimg Iadgfiwy .V 53' :§¢§ar'3}ng and bdging m my persan : n vT(!n§%&.¢Jmg any ampabyee 9:; where abe 3 V. 3 a company, aka any dkactar an; ar tfée mm; away me: am in, use aampany), 'T an tour or visx to the prism at which web awvmmadatfirm E3 mam is aacomtmdstbn in five rramrs via gum' ham witfzin the meaning 9!' wk waist: (4)."' (if 1 If we consider Sectfion 37(4) cf the Act, at me %k is usvad as a guest-hause or a holiday-home and * ti-1a judgment cf the Apex Ccurt in Brfszahma K V'
- vs «- Commiminner of Income Tax Maxie hoid that the awuaaa is not rupoct of any expanditum .if:currsé f§r "ti1a _ fi1§ififi@fl&'i;¢¢ of ms mswenfial aC¢£3f!1!!t0a'iVlL'_$_i3i'!"' of gum
8. Now, five coasmntie:rvV<ai*:i:i*ifVg"'e E that it is a transitiunal its empiayms and bherefori, such ;:r1§r°:1_iV§:mVV£:a_t"§r":'at_:r!':w.'t:':_:'&a catiaaariud as a {'"-4.'/' I gun: ho§s39'_7andV_»:Ef§;I'5sgi_g?n;'5r g\l3°$"#3«fl§§.._3I§¥¢fif0f§, the assesses is antitiedég's§e.':Vda,{1'ut:fi§fi..._ In order to appreciate have fine * heing used has to be car1si1¢v§'a1»%«:;ffg§ by tag' .€fi"V.9r&§r to cnnswer we case of the :_ Qaaéd fall under Smtion 3?(5) of the 2 A' T§:x«';5.§§ij ¢'r"n<3!:'?
9. finding cf Sub-Secfiaori S of Swtéan 37 of the Incaorna Tax Act, it is amt ha us that even if an emplayaa '~m*¢wW~.o:W\.m mgr! wmm.awwuwm\.m Iruwrw wr mmififififififlhfl. fl"%!&.':l2'1 mmwwa R3?" Kflflmflififlfifia WWW QQURT QF Kfififlsflyflfifii §"§5@§"§ ifimwm' my K§E.%N.&"§Mfii§{% MEG" C0 as': war gr vését ac; 3 piaea, at avehkh such acmmrmdaaers is awn %w'$o.rMmN$1$ QM?' W%flE%M%'MM% W'%%WW W" %#W'WaMfiNM3flflM' Wlfiafl mwum; WP RHKW'MUfiRM' ruwn §'tu.a5Jl.IK!'lMl"' hRKNMi'MRR NEW" %m%ML#¥€? WW fi&KMflfl'flKA HEWH situataed, has to be E83636 as a guest house witfjtifi manning cf sub-Section 3 of Sac.-flan 37 of the Act._ ' . '
19. when we pmvision of lawk véiry lodging or boarding to an emplo*s:9*'e..%&i of flf2's--.,a;$(a<aasu4is' is pmvfided by the saws" :--a§§l1ar'..su§5'i_;'sfi2pjpyo§ 'iamii tour or wit be a mac: at fihiCh""fl;§'h $5 situated and if Vv.:§'n"Vf..«'§§§ifip!ayea, the same igmtraaassd gigs' éxen though him magma tzafls ammrfxmodafian. By mm . . ' «, _fi49%fl'fi.m¢f£&}fi{£dL» changing the' x_:am_t'I'9.c.'ef the actual use of the ac<:omm6éd§tien ¢§fi'r§_§tA §i taken away in erder to get $11: s.:_ad§r"'*3:§___Apmvhions of Section 37 of the ffhfi aspect of tha matmr m neither V V §;9§%"Lj§?§§ tf".'amm$aicner af Ewe {Mama Tax at by A. Elisa ?§§f5a§,:x§§g L' teamed saunas! for the rwpondfint-asscsm uyan aw judgmant of the fiambay Ha?! Cwrt in GREAVES CGTTQN 9. CI). LT9 -- VS -- COM!'4ISSIO?dER OF {macaw-vrax (was) we m 0942 (ammv), eanbends amt eyes': Seems; 3?{S} 5! gm Ia-aaaxm Tax Act has been EWM RWMKK WP %MMN.fl§M&M ME . - . .
WW MW Kfi%Nfllfl.%\ Wikflfl mwmm K)?" §"»flé9€.¥°%M3'&W-flmfifl NEWM QUUKH U? KMKEWMEMEQM wzwm uwuma WW mmimmmamnw waewn MW' 10 carssidored by me Baum High Court and ash: kw granted to the mmeelwoéding that such pramkim ' hat:-naked asagm-house.
12. We haw gone tmmgh .
dozazi. Though a nofcinap m¢s $§%p:uy;:i§n'w§% s;ib~ seem 5 of Socticn 37 of mam; awe» :o;ash:.;5:m mt consiwrad the 3? in detaii. They ':t*_l-zA.%.i:,§'1'SsV.':11;-;se¢:4.-iazxx 5 or Section inw-bad under the manzVfe_fi'sc§, effect from Aprii, 1979, but us&,«_hav§ céfisésem him Section 37(5) of "fig; Act'~wt;;_I_l§ not attract and if such pramm é:¥s;4'A?::§v:!A.,«f:Hre¥1_en the empbyw of 31:: asmsaa visits V H V and use the accemnwdatksn pmvidad _ by its order to has that axpansu Enaurmd fir V 'éggfifg acgcféinwdafim is an ailowabie dsducficrt. According fits pmvisions of Svafivan 3'?(5) of the Imam: Tax >""':.§£t"Jt:as- not bun fully aansidared by the Bamwy Nah u Chart except making reference in tha etaurse cf we judgsmnt. In the circumsancas, vans are af fl-re visa»: that tha juégsmrzz reliad amt': the a§ess% is es? 316 apaiicatfiang ,;"%.»/