INCOME TAX ACT, 1961

Section 80HHC

Deduction under section 80HHC - Allowability - Gross rent receipts from employees without adjusting expenses incurred by employer on running and maintenance of such accommodations -

Assessee-company received rent from its employees who were using the company accommodation. It claimed that as per explanation (baa) to section 80HHC, depreciation on the building owned by it should be allowed. However, the said claim was denied by Revenue. Held: Explanation to section 80HHC provides for reduction from the 'profits and gains of business or profession', receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature. The receipts mentioned in the explanation are the actual payments received like brokerage etc and the phrase 'receipt of similar nature' would not increase its scope to include depreciation, which is not on same footing as brokerage, commission etc. Thus, depreciation is not receipt of a similar nature as mentioned in the explanation. Hence, Revenue was justified in holding that gross rent receipts from employees without adjusting expenses incurred by employer i.e. assessee on running and maintenance of such accommodations would be excluded from eligible profits of business for section 80HHC.

REFERRED :

FAVOUR : Against the assessee

A.Y. :

INCOME TAX ACT, 1961

Section 80HHC read with Section 10B

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