Law:

Section:

Where gardens were not maintained for purpose of business, neither any expenditure for maintenance nor depreciation thereon could be allowed Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 1971-72 - Whether where maintenance of any garden had nothing to do with business or profit from business, expenses incurred on maintenance of garden could not be allowed - Held, yes Section 32 of the Income-tax Act, 1961 - Depreciation - Allowability of - Assessment year 1971-72 - Whether where gardens were not maintained for purpose of business, no depreciation could be allowed on assets which formed part of such garden - Held, yes FACTS The assessee-company carrying on the business of cement claimed expenses on account of maintenance of garden at its offices on ground that garden at Sawaimadhopur was used by its employees and their dependents; that at Jaipur lawns maintained were around the office building and those lawns were used by Rajasthan Chamber of Commerce & Industry for holding seminars and parties, etc., and that garden at Delhi was used as a club by the officers and staff members of the company. The Assessing Officer disallowed a part of expenses incurred in respect of Jaipur and Sawaimadhopur on ground that the expenses were not wholly and exclusively for the business purposes. The expenses incurred on maintenance of garden at Delhi were disallowed on the ground that the said expenses had nothing to do with the assessee's business. The AAC upheld the order of the Assessing Officer. The Tribunal held that maintenance of gardens had some impact on the image of the company and allowed the claim of assessee. On reference : HELD There was no justification to allow the entire expenses on the maintenance of gardens at Jaipur and Sawaimadhopur when the expenses were not incurred wholly for the purpose of business. Even the Tribunal had accepted that the expenses might not have a direct role to play in the manufacturing activity but had some impact on the image of the company. That was all irrelevant. The maintenance of any garden had hardly anything to do with the business or profit from business. When the…

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