MIL CONTROLS LTD., ALUVA V. COMMISSIONER OF INCOME TAX, COCHIN

ITA/37/2004

AI Insights

MIL Controls Ltd., a company involved in manufacturing, appealed against the decision of the Income Tax Appellate Tribunal, which had dismissed their claim for deduction of rent paid for a guesthouse for the assessment year 1994-95. The initial claim was partly allowed by the first appellate authority but was later dismissed by the Tribunal. The High Court, referencing a Supreme Court decision, confirmed that such expenses are not deductible under the specific provisions of the Income Tax Act, thus dismissing the appeal.

• Counselvise Citation: [2007] 140 COUNSELVISE.COM (IT) 670961 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 14-11-2007
• Assessment Year: misc
• Other Referred Cases: Britannia Industries Ltd. v. Commissioner of Income-Tax and another [(2005) 278 ITR 546]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: GEORGE GEORGE
• Assessee Lawyers: E K NANDAKUMAR; A K NAMBIAR; ANIL NAIR; PRIYA MANJOORAN
• Keywords: Appeal; Disallowance; Income Tax; Guest House Rent
• Section: 37; 260A

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE K.M.JOSEPH WEDNESDAY, THE 14TH NOVEMBER 2007 / 23RD KARTHIKA 1929 I.T.A.No.37 of 2004 --------------------------------------- (AGAINST THE ORDER DATED 29.11.2001 IN I.T.A.NO.87(COCH)/1998 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN, ASSESSMENT YEAR 1994-95) .................... APPELLANT/APPELLANT IN I.T.A.:- ------------------------------------------------- MIL CONTROLS LTD., ALUVA. BY ADV. SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SRI.ANIL D. NAIR SMT.PRIYA MANJOORAN RESPONDENT/RESPONDENT IN I.T.A.:- -------------------------------------------------------- COMMISSIONER OF INCOME TAX, COCHIN. BY STANDING COUNSEL FOR GOVERNMENT OF INDIA (TAXES) SRI.GEORGE K. GEORGE. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 14/11/2007, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: H.L.DATTU, C.J. & K.M.JOSEPH, J. ------------------------------------------ I.T.A.No.37 of 2004 & C.M.Appln.No.1145 of 2004 ------------------------------------------ Dated, this the 14th day of November, 2007 JUDGMENT H.L.Dattu, C.J. Delay in filing the appeal is condoned. (2) By consent of the learned counsel appearing for the parties, the appeal is taken up for final hearing. (3) Appellant is a company incorporated under the provisions of the Companies Act. It is involved in the manufacture of valve, body, bonnet, its accessories, etc. For the assessment year 1994-95, the assessee had claimed deductions of the amounts paid towards rent for the guest house. The assessing authority had disallowed the claim so made. Aggrieved by the said order, the assessee had carried the matter in appeal before the first appellate authority, who by its order dated 24.2.2000 has partly allowed the claim made by the assessee. Not being satisfied with the said order, the assessee had carried the matter by way of second appeal before the Income Tax Appellate Tribunal, Cochin Bench, Cochin in I.T.A.No.87 of 1998. The Tribunal has dismissed the assessee's appeal. (4) Aggrieved by the orders so passed by the Tribunal, the assessee is before us in this appeal filed under Section 260A of the Income Tax Act, 1961. The assessee has framed only one question of law for our consideration and decision. The same is as under: “Whether on the facts and in the circumstances of the case, was the Income Tax Appellate Tribunal justified in confirming the disallowance of rent paid for guesthouse? ITA No.37/2004 2 (5) The issue so framed by the assessee is no more debatable in view of the law laid down by the apex Court in the case of Britannia Industries Ltd. v. Commissioner of Income-Tax and another [(2005) 278 ITR 546]. In the said decision the Supreme Court has stated as under: “The intention of the Legislature is clear and unambiguous: the intention was to exclude from deduction the expenses towards rents, repairs and also maintenance of premises/accommodation used for the purpose of a guest house of the nature indicated in sub-section (4) of section 37. If the Legislature had intended that deduction would be allowable in respect of all types of buildings/accommodation used for the purpose of the business or profession, then the Legislature would not have felt the need to amend the provisions of section 37 so as to make a definite distinction with regard to buildings used as guest houses as defined in section 37(5) and the provisions of sections 31 and 32 would have been sufficient for that purpose.” (6) In view of the law declared by the apex Court, the question of law framed by the assessee requires to be answered against the assessee and in favour of the Revenue. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (K.M.JOSEPH) JUDGE vns "