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[2007] 293 ITR 517 (Allahabad) HIGH COURT OF ALLAHABAD Commissioner of Income-tax v. Deepchand Naresh Chand R. K. AGRAWAL AND VIKRAM NATH, JJ. IT REFERENCE NO. 134 OF 1998 DECEMBER 14, 2006 Section 37(3A) of the Income-tax Act, 1961 - Advertisment/Sales promotion expenses â–  The provisions of sub-section (4) of section 37 would be attracted to a case where the provisions of section 30 were applicable insofar as it related to the guest house expenses. [Assessment year 1986-87] CASE REVIEW Britannia Industries Ltd. v. CIT [2005] 278 ITR 546 (SC)/[2005] 5 RC 619 followed & relied upon. JUDGMENT R.K. Agrawal, J.-The Income-tax Appellate Tribunal has referred the following question of law under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the opinion of this court : "Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in upholding the order of the Commissioner of Income-tax (Appeals) in deleting the disallowance of rent of Rs. 31,200 in respect of 'Transit House' accommodation on the premise that the same being specifically allowable under section 30 of the Income-tax Act, the prohibitory provisions of section 37(4) of the Income-tax Act were not applicable ?" The reference relates to the assessment year 1986-87. Briefly stated, the facts giving rise to the present reference are as follows : The deduction claimed by the assessee on account of rent included an amount of Rs. 31,200 paid for premises used as a guest house. This amount was disallowed by the Assessing Officer under section 37(4) of the Act. On appeal, the Commissioner of Income-tax (Appeals) deleted the disallowance on the premise that section 37(4) of the Act authorises disallowance of only those expenses which could be considered under sub-section (1) or sub-section (3) of section 37 of the Act. Since payment of rent was allowable under section 30 of the Act, the provisions of section 37(4) and section 37(5) could not be invoked to disallow payment of rent of the guest house. On appeal by the Department, the Tribunal referred to the cleavage of opinion on the subject among various High Courts and preferred to…

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