COMMISSIONER OF INCOME TAX Vs. THIAGARAJAR MILLS LIMITED

JUDGEMENT

(1.) The revenue is on appeal against the order of the Income Tax Appellate Tribunal, Madras 'A' Bench, dated 23.08.2005 in ITA No. 1466/Mds/2003 in respect of the assessment year 1997-98.

(2.) The facts of this case are as follows: For the assessment year 1997-98, the assessee company filed its return of income and claimed an allowance towards the maintenance of the bunglow at Coutrallam and Kodaikanal on the ground that the expenses incurred regarding the same for business purpose only. The Assessing Officer disallowed the claim of the assessee Under Section 37(4) and brought the same to tax. The Commissioner of Income Tax (Appeals) allowed the appeal relying on the decision of his predecessors, confirmed the order of the Assessing Officer and held the appeal in favour of the revenue. Aggrieved by that order, the assessee filed an appeal before the Tribunal and the Tribunal held that the expenditure on guest house is an allowable expenditure following the decision of this Court in CIT v. South India Viscose reported in . The correctness of the same is now canvassed before us by the revenue by formulating the following question of law:

(3.) Though the Counsel for the revenue started arguing the case on merits, the learned Counsel for the assessee submits that the dispute in respect of the disallowance is only a sum of Rs. 43,618/-. Hence the tax effect is much lower than the one fixed by the Central Board of Direct Taxes Circular in F. No. 279/126/98ITJ dated March 27, 2000. In view of the circular, the impugned order need not be deliberately discussed and decision rendered and can be disposed of based on the circular issued despite the fact that CIT v. South India Viscose reported in 259 ITR 107 has been disproved by the subsequent Supreme Court Judgment.