2012 (11) TMI 673 - HC - Income Tax

Expenditure Tax, Interpretation Of Taxing Statutes, Writ Tariff of the rooms exceeded the prescribed limit of Rs.1,200/- Held that - No doubt, the word any is capable of having more than one meaning but that will not prevent the courts from making an endeavour to place the correct and true meaning with due regard to the consequences resulting in hardship, injustice and absurdity. A construction should always be made to achieve the object of the enactment rather than to defeat the same. Therefore, we hold that the word any occurring in Section 3 of the Expenditure Tax Act does not mean all alone but on the other hand it means all or every as well as some or one . Held that - the assessee is liable for levy of tax under the Expenditure Tax Act 1987 as admittedly the assessee s tariff rate exceeded the limit of Rs.1,200/-. However, though the assessee is held to be liable, that would not be taken to mean that the entire expenditure of the assessee as found by the Assessing Authority should be brought to tax. Since the tax is payable by the customers who avail any of the services enumerated under Section 5 of the Act, it is such expenditure incurred by such person who occupies and the expenditure incurred during such time for all or any of the services rendered alone would constitute chargeable expenditure and the assessee becomes liable for the same under Expenditure Tax Act. Accordingly, the assessment order made by the Assessing Officer bringing the entire expenditure liable for expenditure tax is held as not correct. - Decided in favor of revenue. Decision in case of H. P. Tourism Development Corporation Versus Union of India And Others 1998 (12) TMI 59 - HIMACHAL PRADESH HIGH COURT , followed.

Summary

Issues Involved:
1. Applicability of the Expenditure Tax Act to the assessee for the assessment years 1997-98 and 1998-99.
2. Interpretation of the term "any unit of residential accommodation" in Section 3 of the Expenditure Tax Act.
3. Determination of chargeable expenditure under the Expenditure Tax Act.

Issue-wise Detailed Analysis:

1. Applicability of the Expenditure Tax Act:
The core issue is whether the assessee, engaged in the hotel business, is liable under the Expenditure Tax Act, 1987, for the assessment years 1997-98 and 1998-99. The Assessing Officer observed that the tariff rates of the assessee's hotel rooms exceeded the prescribed limit of Rs.1,200/-, thereby necessitating the filing of an expenditure tax return. The assessee's appeal to the Commissioner of Income Tax (Appeals) was dismissed, affirming the applicability of the Expenditure Tax Act. The Tribunal, however, ruled in favor of the assessee, interpreting the term "any unit of residential accommodation" to mean "all units," thus exempting the assessee from the Act's purview. The Revenue's appeal challenges this interpretation.

2. Interpretation of "any unit of residential accommodation":
The crux of the matter lies in the interpretation of the term "any" in Section 3 of the Expenditure Tax Act. The Tribunal, relying on the Kerala High Court decision (272 ITR 331), interpreted "any" to mean "all," thus excluding the assessee from the Act's scope. The Revenue, however, argued that "any" should be interpreted to mean "one or more," thus including the assessee under the Act. The court examined conflicting views from the Kerala High Court and the Himachal Pradesh High Court (238 ITR 38), ultimately agreeing with the latter. The Himachal Pradesh High Court's interpretation, which considers "any" to mean "one or more," aligns with the Act's objective to tax lavish expenditures in hotels.

3. Determination of Chargeable Expenditure:
The court highlighted that the Expenditure Tax Act applies to hotels where room charges for any unit exceed Rs.1,200/-. The chargeable expenditure includes payments for accommodation, food, beverages, and other services provided by the hotel. The court emphasized that the tax is levied on the actual expenditure incurred by customers occupying rooms with tariffs above the specified limit. The Assessing Officer's approach of taxing the entire expenditure without detailed breakdowns was deemed incorrect. The court directed a reassessment to determine the actual chargeable expenditure, ensuring compliance with the Act's provisions.

Conclusion:
The court set aside the Tribunal's order and remitted the matter to the Assessing Officer for a detailed inquiry into the actual chargeable expenditure. The assessee is required to provide records of accommodation charges to facilitate accurate assessment. The court's decision aligns with the Himachal Pradesh High Court's interpretation, ensuring the Expenditure Tax Act's effective enforcement. The questions of law were answered in favor of the Revenue, emphasizing the need for a practical and just interpretation of the term "any" to achieve the Act's objectives.