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1 - 4 of 4 (0.66 seconds)Section 30 in The Income Tax Act, 1961 [Entire Act]
Commissioner Of Income-Tax vs Ahmedabad Mfg. And Calico Printing Co. ... on 4 November, 1993
7. A reading of Sub-section (4) and more clarified by Sub-section (5) would clearly show that any accommodation by whatever name called, maintained, hired, reserved or arranged by the assessee for providing boarding or lodging to any person on tour or visit to the place at which such accommodation is situated, will be treated as accommodation in the nature of a guest-house and that no allowance shall be made in respect of any expenditure incurred by the assessee after February 28, 1970, on the maintenance of any such guest-house. It cannot be contended that in spite of the above provisions specifically relating to guest-house, the assessee can still put forward a claim under the general provisions of Section 30. Learned counsel for the assessee relied on the decisions in C1T v. Chase Bright Steel Ltd. (No. 1) [1989] 177 ITR 124 (Bom) and CIT v. Ahmedabad Mfg. and Calico Printing Co. Ltd. [19921 197 ITR 538 (Guj) in support of its contention. On examining these decisions, we find the first decision, which is rendered by the Bombay High Court, considered a case prior to the introduction of Sub-sections (4) and (5) of Section 37. The second decision which was rendered by the High Court of Gujarat, just followed the Bombay High Court's decision even though, by that time, Sub-section (4) of Section 37 had been introduced. We are not inclined to follow the above decisions in the present case.
The Indian Aluminium Co. Ltd vs C.I.T., West Bengal, Calcutta on 29 March, 1972
10. We find no merit in this contention. Admittedly, the assessee-company is doing business with foreign collaboration and the plaque was sent by their foreign collaborator in memory of their late managing director. It was necessary and even essential for the business interest of the assessee to take delivery of the gift sent from the foreign collaborator in order to maintain a friendly relationship with the foreign collaborators. The Tribunal was fully justified in holding that if the company had not taken delivery of the same, it would have certainly offended the feelings of the foreign collaborators which might, in turn, adversely, affect the smooth development of their further business relationship. Therefore, there was no option for the assessee but to take delivery of the gift in the best interest of promotion of its business. If that be so, we are of the view that the expenditure incurred by the assessee on this account would satisfy the test laid down by the Supreme Court in Indian Aluminium Co. Ltd. v. CIT [19721 84 ITR 735. Payment of import duty to the extent of Rs. 52,248 by the assessee is an expenditure which was really incidental to the carrying on of the business of the assessee and, therefore, entitled to deduction.
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