RAM RATTAN, A. M. - Order ITA No. 137/Chandi/84 is appeal by Revenue and cross objection No. 13/Chandi/84 is by assessee which arises out of above appeal. Both Pertain to asst. yr. 1980-81. They are, therefore, disposed of by common order. 2. In first ground of appeal, addition of Rs. 5, 376 representing value of perquisites allowed to manager in excess of statutory limit has been contested. According to AO, during accounting period relevant to assessment year under consideration, total salary paid to Managing Director was Rs. 25,750 whereas perquisites were given to tune of Rs. 10,526. value of perquisites over above 20per cent of salary was to be disallowed which worked out to Rs. 5,376. These were disallowed accordingly. 3. Before CIT (A) it was contended that salary and perquisites, as provided under IT Rules, did not exceed limit of Rs. 72,000 which was available in case of Managing Director in view of provisions, contained in s. 40 (c) of IT Act, 1961. He, therefore, deleted addition of AO and contended that order. 4. ld. Departmental Representative supported order of CIT (A) was erroneous. ld. counsel for assessee, on other hand, has supported order of CIT (A). He has further contended that assessee was allowed perquisites of Rs. 10, 526 whereas assessee was entitled to such perquisites as sanctioned by company up to Rs. 10,550 as below : : 3 X (i) Car with driver for officer and personal use 150 = 450 p. m. : 450 monetary value as per IT Rules X 12 =5,400 (ii) Allowance towards residential accommodation @ 5,150 20per cent fo salary i. e. 20per cent of Rs. 25,750 Total perquisites allowed by company : 10,550 . . 5. We have given our careful consideration to rival submissions. In view of above facts stated on behalf of assessee and also reasons given by CIT (A), we do not find any justification to interfere with his order so far as this ground of appeal is concerned. 6. second ground for appeal is that CIT (A) has erred in restricting to Rs. 4,100 disallowance of Rs. 4,436 representing value of perquisites allowed to Project Manager in excess of statutory limit and in allowing relief of Rs. 10,336. According to ITO, Project Manager was paid salary of Rs.36,000 during year under consideration and perquisites given to him were of value of Rs. 21,636. He, therefore, disallowed perquisites in excess of 20per cent of salary i. e. at Rs. 14,436. CIT (A) has observed that disallowance was rather excessive. He, therefore, restricted same to Rs. 4,100 giving relief to assessee at Rs. 10,336. 7 . In cross- objection by assessee it has been stated that CIT(A) has wrongly sustained addition of Rs. 4,100 out of salary and perquisites paid to Mr. Mullik. 8 . ld. Departmental Representative contended that in ratio of decision of Kerala High Court CIT vs. Common Wealth Trust Ltd. (1982) 28 CTR (Ker) 311 (FB) : (1982) 135 ITR 19 (Ker) (FB), all allowances paid in cash were to be treated as perquisites and, therefore, disallowances had rightly been made by assessing officer. ld. counsel for assessee, on other hand, referred to judgment of Kerala High Court in case of CIT vs. Toshiba Anand Lamps Ltd. (1983) 34 CTR (Ker) 341 : (1984) 145 ITR 563 (Ker) and contended that earlier decision of Kerala High Court in (1982) 135 ITR 19 (Ker) (supra) was overruled by said High Court decision in (1984) 145 ITR 563 (Ker) (supra) . It was, therefore, contended that allowances given to Project manager could not be termed as perquisite. He further contended that over and above salary of Rs. 36,000, Project Manager was paid ex gratia allowance of Rs. 8,221. encasement of earned leave of Rs. 3300 and HRA of Rs. 5580 totalling to Rs. 17,101. These allowances could not be termed as perquisites in view of decision of Kerala High Court reported as (1984) 145 ITR 563 (Ker) (supra). He, therefore, urged that total salary paid to Project Manager was at Rs. 53,101 (36000+ 17101). In addition to above, he was allowed perquisites towards medical benefits at Rs. 4534. It was urged that perquisites on account of medical benefit being less than 20per cent of salary of Rs. 53.101, no disallowance was called for. He, therefore, supported order of CIT (A) and further contended that disallowance of Rs. 4100 made by him was also uncalled for. 9. We have given our careful consideration to rival submissions. In light of decision of Kerala High Court reported as CIT vs. Toshiba Anand Lamps Ltd. (1983) 34 CTR (Ker) 341 : (1984) 145 ITR 563 (Ker), we have no hesitation in holding that cash allowances of value of Rs. 17,101 is salary. Taking these allowance as salary along with salary of Rs. 3600, value of perquisites on account of medical benefits of Rs. 4534 beign less than 20per cent of salary, in our opinion no disallowance was called for. result is that ground of appeal by Revenue is rejected and cross objection by assessee is allowed. 10. third ground of appeal by Revenue is that CIT (A) has erred in deleting addition of Rs. 5600 representing guest house expenses which were not allowable in view of he specific provision of s. 37 (5) of IT Act, 1961. During accounting period relevant to assessment year under appeal, guest house expenses were claimed at Rs. 5600 being rent of guest house. assessee officer held that these were not allowable in view of provisions contained in s. 37(4) of IT Act. He, therefore, disallowed expenditure. It was submitted before CIT (A) that guest house was for purpose of business and it was used for accommodating employees till they found accommodation and were also used for accommodating auditors etc. He also relied upon decision in case of Punjab Concast Ltd. above submission found favour with CIT (A) who deleted addition. above submission found favour with CIT (A) who deleted addition. 11. ld. Departmental Representative has submitted before us that s. 37 (5) was inserted in IT Act by Finance Act, 1983 with retrospective effect from 1st April, 1979 according to which any accommodation by whatever name called maintained, hired or reserved or otherwise by assessee providing lodging to any person including any employee or where assessee is company also any director or holder of any other officer in company on tour or visit to place at which such accommodation is situated is accommodation in nature of guest house within meaning of sub-s. (4). He, therefore, urged that disallowance has wrongly been deleted by CIT (A). ld. counsel for assessee, on other hand, contended that accounting period of assessee relevant to asst. yr. 1980-81 under appeal was from 1st Jan., to 31st Dec.1979 whereas retrospective amendment was made applicable from 1st April, 1979. assessee was, therefore, at least entitled to deduction for period from 1st Jan., 1979 to 31st March, 1979. 12. After hearing both parties, we are of opinion that in view of amendment in s. 37 (5) with retrospective effect from 1st April, 1979, expenses were not admissible. We, however, find force in arguments made on behalf of assessee that it is entitled to such deduction for period 1st Jan., 1979 to 31st March, 1979. assessing officer is directed to compute such expenses for this period and allow same accordingly. 13. This finishes appeal by Revenue. Ground No. 1 of cross- objection is against sustenance of disallowance of Rs. 23 50 out of sales promotion expenses. assessing officer has observed that entertainment expenses during year under consideration were at Rs. 7350 for period 1st June, 1979 onwards. After giving deduction of Rs. 5,000, balance of Rs. 23 50 was disallowed by assessing officer. CIT (A) has upheld same being expenses in nature of entertainment. While doing so, he relied upon decision Punjab and Haryana High Court in case of CIT vs. Khem Chand Bahadur Chand (1981) 23 CTR (P&H)(FB) : (1981) 131 ITR 336 (P&H)(FB). Since disallowance is in conformity with decision of Punjab and Haryana High Court, we decline to interfere. 1 4 . In result both appeal and cross- objection are partly allowed. *** INSPECTING ASSISTANT COMMISSIONER OF INCOME TAX (ASST.) v. MUKERIAN PAPER LTD.