Section 115 - Substitution of new sections for sections 3 to 5 - Finance (No. 2) Act, 1991

115. Substitution of new sections for sections 3 to 5. For sections 3 to 5 of the Expenditure-tax Act, the following sections shall be substituted, with effect from the 1st day of October, 1991, namely: 3. Application of the Act. This Act shall apply in relation to any chargeable expenditure (1) incurred in a hotel wherein the room charges for any unit of residential accommodation at the time of incurring of such expenditure are four hundred rupees or more per day per individual and where, (a) a composite charge is payable in respect of such unit and food, the room charges included therein shall be determined in the prescribed manner; (b) (i) a composite charge is payable in respect of such unit, food, drinks and other services, or any of them, and the case is not covered by the provisions of sub-clause (a), or (ii) it appears to the Assessing Officer that the charges for such unit, food, drinks or other services are so arranged that the room charges are understated and the other charges are overstated, the Assessing Officer shall, for the purposes of this clause determine the room charges on such reasonable basis as he may deem fit; and (2) incurred in a restaurant. 4. Charge of expenditure-tax. Subject to the provisions of this Act, there shall be charged on and from (a) the commencement of this Act, a tax at the rate of twenty per cent. of the chargeable expenditure incurred in a hotel referred to in clause (1) of section 3: Provided that nothing in this clause shall apply in the case of a hotel referred to in clause (ii) of sub-section (5) of section 80-IA of the Income-tax Act during the period beginning on the 1st day of April, 1991 and ending on the 31st day of March, 2001; (b) the 1st day of October, 1991, a tax at the rate of fifteen per cent. of the chargeable expenditure incurred in a restaurant referred to in clause (2) of section 3. 5. Meaning of chargeable expenditure. For the purposes of this Act, chargeable expenditure, (1) in relation to a hotel referred to in clause (7) of section 3, means any expenditure incurred in, or payments made to, the hotel in connection with the provision of (a) any accommodation residential or otherwise; or (b) food or drink by the hotel, whether at the hotel or outside, or by any other person at the hotel; or (c) any accommodation in such hotel on hire or lease; or (d) any other services at the hotel, either by the hotel or by any other person, by way of beauty parlour, health club, swimming pool or other services, but does not include (i) any expenditure which is incurred, or payment for which is made, in foreign exchange; (ii) any expenditure incurred by persons within the purview of the Vienna Convention on Diplomatic, Relation s, 1961 or the Vienna Convention on Consular Relations , 1963; (iii) any expenditure incurred in any shop or in any office which is not owned or managed by the person who carries on the business of a hotel; (iv) any expenditure by way of any tax, including tax under this Act. Explanation. For the purposes of this clause, (a) expenditure incurred or any payments made in Indian currency obtained by conversion of foreign exchange into Indian currency shall in such cases and in such circumstances as may be prescribed be deemed to have been incurred or, as the case may be, made in foreign exchange; and (b) foreign exchange and Indian currency shall have the meanings respectively assigned to them in causes (h) and (7c) of section 2 of the Foreign Exchange Regulation Act, 1973 (46 of 1973); (2) in relation to a restaurant referred to in clause (2) of section 3, means any expenditure incurred in, or payments made to, a restaurant in connection with the provision of food or drink by the restaurant, whether at the restaurant or outside, or by any other person in the restaurant, but does not include any expenditure referred to in sub-clauses (ii) and (iv) of clause (1). .