(a) one or more guest houses at the principal place of his business or profession in India ;(2) The allowance in respect of expenditure incurred by an assessee, not being a company, on the maintenance of any residential accommodation which results directly or indirectly in the provision of any benefit or any amenity or perquisite to an employee shall not exceed twenty per cent. of the salary due to such employee in respect of the period of his occupation of the said accommodation during the relevant previous year :
(b) where the assessee is engaged in the raising or processing of raw materials or the manufacture, processing or production of any article or thing, or is maintaining any industrial establishment in which not less than fifty whole-time employees have been employed throughout the relevant previous year, one or more guest houses at the place where any such operation is performed or the establishment is maintained, as the case may be ;
(c) (i) in the case of an assessee, being a banking company, one or more guest houses at Bombay ;
(ii) in the case of any other assessee, one or more guest houses at Delhi and at not more than two other places in India, which may be the capital of a State Government or any other place which is of direct importance to the business or profession of the assessee ;
(d) where the assessee maintains one or more guest houses at any place other than the places referred to in Clause (a) or Clause (b) or Clause (c) any such guest house or guest houses exclusively used by his employees while on leave :
Provided that the assessee has in his employment not less than one hundred whole-time employees throughout the relevant previous year and the guest house is, or the guest houses are, as the case may be, maintained mainly for the use of the whole-time employees drawing salary not exceeding one thousand rupees per month.
Provided that nothing in this sub-rule shall apply to any expenditure which results directly or indirectly in the provision of any benefit or amenity or perquisite to an employee whose income chargeable under the head ' Salaries ' is seven thousand five hundred rupees or less.
(3) No allowance shall be made in respect of expenditure-incurred on the maintenance of any residential accommodation in the nature of a guest house unless the assessee maintains a register showing the following particulars, namely :-
(i) the name and address of every employee and, in the case of an assessee being a company, firm, an association of persons or a Hindu undivided family, also of every director of the company, partner or member of the firm, association or family, as the case may be, who had stayed in the guest house ;(4) For the purposes of this rule, and Rule 6D,-
(ii) whether his stay in the guest house was for the purposes of the business or profession of the assessee ;
(iii) the date of his arrival at the guest house and the date of his departure therefrom ;
(iv) the amount, if any, paid by him towards his lodging and boarding in the guest house.
(i) the expression 'guest house' shall include accommodation hired or reserved by the assessee in a hotel for a period exceeding one hundred and eighty-two days during the previous year ;
(ii) the expression 'salary' shall have the meaning assigned to it in Clause (h) of Rule 2 of Part A of the Fourth Schedule.
Reference/Source: Check at Income Tax site for latest version of the Rules - link