2014 (9) TMI 12 - HC - Income Tax

Computation of deduction u/s 80HHD - Expenditure tax, luxury tax and sales tax to be included or not Held that - Following the decision in CIT Vs Adyar Gate Hotels Limited 2006 (2) TMI 155 - MADRAS High Court - expenditure tax, luxury tax and sales tax should not be included in the total business receipts for the purpose of computing of deduction u/s 80HHD revenue could not controvert or filed any higher Court s decision on this issue to take a different view the order of the Tribunal is upheld Decided against Revenue.

Summary

Issues:
1. Whether the expenditure tax, luxury tax, and sales tax should be included in the total business receipts for computing the deduction under Section 80 HHD of the Income Tax Act.

Analysis:
The case involves an appeal against the order of the Income Tax Appellate Tribunal regarding the inclusion of expenditure tax, luxury tax, and sales tax in the total business receipts for calculating the deduction under Section 80 HHD of the Income Tax Act. The respondent, running a hotel business, had the total taxes excluded from the denominator while computing the deduction. The Assessing Officer rectified this error, including the total taxes in the computation. The Commissioner of Income Tax (Appeals) allowed the appeal, relying on a previous judgment. The Income Tax Appellate Tribunal upheld the decision, citing the jurisdictional High Court's ruling that the mentioned taxes should not be included in the total business receipts for deduction calculation under Section 80 HHD of the Act.

The Revenue challenged the Tribunal's decision, arguing that a Supreme Court judgment related to a different section of the Act was not considered. However, the High Court noted that the case pertained to Section 80 HHD, not Section 80 HHC, and the previous judgment regarding Section 80 HHC remained applicable. As no error of law was identified in the Tribunal's order, the High Court upheld the decision, stating that the question of law raised in the appeal had already been answered in favor of the assessee. Consequently, the appeal was dismissed as lacking merit, with no substantial question of law arising for consideration.

In conclusion, the High Court affirmed the Tribunal's decision that the expenditure tax, luxury tax, and sales tax should not be included in the total business receipts for computing the deduction under Section 80 HHD of the Income Tax Act. The appeal by the Revenue was dismissed as it failed to demonstrate any legal error justifying interference with the Tribunal's order.