: 1 : IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION INCOME INCOME INCOME TAX APPLICATION NO.379 OF 1999 TAX APPLICATION NO.379 OF 1999 TAX APPLICATION NO.379 OF 1999 The Commissioner of Income Tax, . City - IV, Mumbai ...Applicant V/s. Associated Cement Companies Ltd., . Mumbai ...Respondent Mr.A.S. Rao, Advocate, for the Applicant. . Mr.A.K. Jasani with Mr.P.C. Tripathi, Advocates, for the Respondent. CORAM CORAM CORAM : DR. S. RADHAKRISHNAN & : DR. S. RADHAKRISHNAN & : DR. S. RADHAKRISHNAN & A.V. A.V. A.V. NIRGUDE, JJ. NIRGUDE, JJ. NIRGUDE, JJ. DATE DATE DATE : 4TH JULY, 2008. : 4TH JULY, 2008. : 4TH JULY, 2008. P.C. P.C. P.C. : : : . Heard the learned Counsel for the Applicant and the learned Counsel for the Respondent. 2. In the above Application, the Applicant is seeking a reference on the following substantial question of law :- ". Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that the expenditure on maintenance of inspection bungalows and transit flats amounting to Rs.30,00,367/- are not inclusible for the disallowance : 2 : U/s.37(4)/37(5) of the I.T. Act?" 3. The learned Counsel for the Respondent Mr.Jasani fairly pointed out that the above question of law has been answered against the assessee and in favour of the Revenue by the judgment of Division Bench of our Court in Commissioner of Income Tax V/s. Ocean Carriers Pvt. Ltd. [211 ITR 357 Bom.] wherein in paragraph No.4 this Court has categorically held that if an employee or a Director of the assessee company stays in a guest house, it will come in the meaning of sub-section 4 of section 37 of the Income Tax Act. 4. However, Mr.Jasani also pointed out the judgment of the Madras High Court in the case of Commissioner of Income Tax, Tamil Nadu-III V/s. Aruna Sugars Ltd. [123 ITR 619], wherein the Madras High Court has taken a contrary view that employees are not strangers so as to be guests and hence it cannot be called as guest house which falls within the scope of Section 37(3). However, the Hon’ble Supreme Court in the case of Britannia Industries Ltd. V/s. Commissioner of Income Tax & Anr. [278 ITR 546 (SC)] has clearly held in paragraph No.20 that such guest houses will be covered under sub-section 4 of section 37 of the Income Tax Act. : 3 : 5. Under these circumstances, we allow the above Application. 6. Under the aforesaid facts and circumstances, we direct the ITAT to send the statement of facts on the above question of law at the earliest. [A.V. [A.V. [A.V. NIRGUDE, J.] [DR. S. RADHAKRISHNAN, J.] NIRGUDE, J.] [DR. S. RADHAKRISHNAN, J.] NIRGUDE, J.] [DR. S. RADHAKRISHNAN, J.]