INCOME TAX ACT, 1961

Section 37(1)

Business expenditure - Guest house and staff welfare expenses - Assessee not being able to provide complete details/invoices, etc. -

Assessee claimed deduction of staff welfare and guest house expenses. AO disallowed deduction on the ground that expenses could not be stated to be incurred wholly and exclusively for the purposes of assessee's business. Assessee's case was that guest house was maintained to facilitate stay of employees who had to travel for business purposes and making alternate arrangements would have been more expensive and no outsiders used the guest house. Further, staff welfare expenses were incurred for benefit of its employees through employees welfare clubs located at employees colony adjacent to assessee's company's fertilizer complex.Held: Fact remained that assessee could not provide complete details/evidences/invoices/bills, etc., of staff welfare expenses and guest house expenses to prove that expenses were incurred wholly and exclusively for the purposes of business of assessee and hence under these circumstances and keeping in view that it was an old litigation with a view to end litigation and being fair to both the rival parties, 50% of the concerned expenses was allowed.

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. : 2003-04

INCOME TAX ACT, 1961

Section 37(1)

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