- (1.) HEARD learned counsel for the parties. This appeal was admitted on 16th February, 2001, on the following substantial questions of law: (I) Whether the Tribunal was justified in allowing full relief to the Assessee in respect of claim of expenditure on maintenance of transit house/Guest house on the plea that the expenditure was related to transit house and not to Guest House ? (II)Whether the Tribunal was justified in holding that the expenditure on maintenance of Guest House/Transit House was business expenditure ? (III)Whether the Tribunal was justified in giving direction to the Assessing Officer to consider the issue of allowing depreciation of sale off assets/surveyed off assets in the light of provisions of Section 43(6) and 50 of the Income tax Act?
(2.) AS per the case, the learned Assessing Officer vide assessment order dated 28th March, 1995 allowed 5% of the total expenditure as deduction on account of expenditure incurred by the assessee in maintaining the Guest house. The assessee claimed that he had to incur the said expenditure of Rs. 1,16,07,450/ - to maintain the Guest House because of the peculiar situation of its location and working of the Company. However, the Assessee claimed 25% of that amount as deduction under Section 37(3) of the Income Tax Act, 1961. The Assessment Officer allowed only 5% of the total expenditure as deduction. However, from the assessment order, it is apparent that no reason has been assigned by the Assessing Officer for not allowing 25% of the expenditure for maintaining the Guest House which is meant for official use of assessee Company. Aggrieved against the said order of assessment dated 28th March, 1995, the assessee preferred appeal before the Commissioner of Income Tax(Appeals), Ranchi, who, in turn, partly allowed the appeal and increase the benefit to the extent of 7.5%. However, we found from the order of the appellate authority (Annexure -2) that the appellate authority also did not assign any reason for rejection of the claim of the assessee and for allowing of only 7.5% of the total expenditure incurred for maintaining and using the Guest House, which has been also termed as Transit house. Again aggrieved against the aforesaid two orders, the Assessee preferred appeal before the Income Tax Appellate Tribunal, Patna Bench, Patna. The appellant's appeal was allowed by the Income Tax Appellate Tribunal, Patna after taking note of the fact that no reason has been assigned by the authorities for disallowing the expenditure claim of the assessee, which, according to the view of Income Tax Appellate Tribunal, was justified expenditure. Aggrieved against the said order of Income Tax Appellate. Tribunal, the Revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961.
(3.) LEARNED counsel for the appellant submitted that the Income Tax Appellate Tribunal has gravely erred in law in allowing the claim of the assessee to the extent of 25% of the expenditure incurred on and over the Guest House.;