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TMI Blog2009 (10) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... Chandra Nigam, J. Petitioner Counsel :- A. N. Mahajan, B. Agarwal Respondent Counsel :- Ashok Trivedi, Arvind Shukla JUDGMENT The judgment of the court was delivered by Prakash Krishna, J. - All these appeals have been filed by the department under Section 260 A of the Income Tax Act. The Income Tax Appeal No.25 of 1999 relating to the assessment year 1990-91 was considered as a leading case by the learned counsel for the parties, therefore, the facts from the said appeal are taken into consideration. It was stated at the bar that in the remaining appeals, except the assessment year, the relevant facts are identical. The facts of the case may be noticed in brief. The respondent herein is a company registered under the Indian Companies Act and is running a five star hotel in the name and style of "Taj Ganges". In the course of assessment proceedings, the assessee respondent claimed deduction under Section 80 HHD of Rs.35,28,323/-, under the Income Tax Act. The Assessing Officer found that the assessee has claimed the deduction under Section 80 HHD on room rent also, which according to him, is not permissible under the said Section. He was of the view that und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of a sum equal to the aggregate of - (a) fifty per cent of the profits derived by him from services provided to foreign tourists; and (b) so much of the amount out of the remaining profits referred to in clause (a) as is debited to the profit and loss account of the previous year in respect of which the deduction is to be allowed and credited to a reserve account to be utilized for the purposes of the business of the assessee in the manner laid down in sub- section (4). (2) This section applies only to services provided to foreign tourists the receipts in relation to which are received in or brought into, India by the assessee in convertible foreign exchange within a period of six months from the end of the previous year or, there the Chief Commissioner or Commissioner is satisfied (for reasons to be recorded in writing) that the assessee is, for reasons beyond his control, unable to do so within the said period of six months, within such further period as the Chief Commissioner or Commissioner may allow in this behalf. (3) For the purposes of sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to in clause (b), in the year immediately following the period of five years specified in sub-section (4), and shall be charged to tax accordingly. (6) The deduction under sub-section (1) shall not be admissible unless the assessee furnishes in the prescribed form, along with the return of income, the report of an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed on the basis of the amount of convertible foreign exchange received by the assessee for services provided by him to the foreign tourists. Explanation: For the purposes of this section :- (a) "travel agent" means a travel agent or other person (not being an airline or a shipping company) who holds a valid licence granted by the Reserve Bank of India under section 32 of the Foreign Exchange Regulation Act, 1973 ( 46 of 1973) ; (b) "convertible foreign exchange" shall have the meaning assigned to it in clause (a) of the Explanation to section 80HHC. (c) services provided to "foreign tourists" shall not include services by way of sale in any shop owned or managed by the person who carries on the business of hotel or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee who is engaged in the business of a hotel or ....................... . The object of granting deduction is to an assessee whose earnings is in convertible foreign exchange and who is engaged in the business of hotel. The use of words "engaged in the business of hotel" implies that the assessee is carrying on the business of a hotel and the hotel without letting an accommodation is unthinkable. The very idea of the hotel is to permit tourists to occupy accommodation as licensee. The Apex Court in the case of M/s. Northern India Caterers (India Limited ) Vs. LT. Governor of Delhi, 1979, U.P.T.C. 826, though in a slightly different context, has noticed the origin and historical development of hotel business. It was a case under the Bengal Finance (Sales Tax Act, 1941. The controversy involved therein was as to whether the tax is payable by a dealer under Section 4 of the aforestated Act for the service of meals by the appellant therein in the restaurant. In other words, whether such a service constitutes a sale of food stuff or not. In this background, in para 4 of the report, the Apex Court has observed that a hotelier is like an inn-keeper. It noticed that it is a common l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve from the table what is left over. In these cases the decision under review squarely applies. My learned brother has clarified and confined that the ratio to the contours so set out. He has also pointed out that counsel, at the earlier hearing, did not contest this factual matrix. A review in counsel's mention cannot repair the verdict once given. So the law laid down must rest in peace." The said judgment is reported in 1980 U.P.T.C. 327 : M/s. Northern India Caterers Vs. LT. Governor of Delhi. On facts the assesses has also pleaded herein and which has not been disputed even by the Assessing Officer, that the assessee is running a five star hotel and is providing various services to foreign tourists who stay in the hotel. The room rent charged from foreign tourists is not room rent alone. Rather it is services attached with room. It is a matter of common knowledge and experience that the services provided by the hotelier have a major role to place with regard to the tariff/room rent. The dimensions of a room is not so important. Its location, the view from the room, quality of furniture and fixtures, facilities such as air conditioning, T.V., video conferencing, teleph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of some word occurring in it. (See Patel Roadways Limited Vs. Prasad Trading Co. AIR 1992 SC 1514. An Explanation, normally should be so read as to harmonize with and clear up any ambiguity in the main Section and should not be so construed as to widen the ambit of the section. In Sundaram Pillai Vs. Pattabiraman: AIR 1985 SC 582, the Apex Court has culled out from the earlier cases the following as objects of an Explanation to a statutory provision:- (a) to explain the meaning and intendment of the Act itself, (b) where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve, (c) to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful, (d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and (e) it cannot, however, take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omething from the contents of the provision and at times even, by way of abandon caution, to clear any mental cobwebs surrounding the meanings of statutory provision spun by interpretative process to make the position beyond controversy or doubt. There is another aspect of the case. It has been held repeatedly that the provisions dealing with the deduction of exemption and relief in fiscal statute should be construed reasonably and in favour of the assessee vide CIT Vs. Gwaliar Rayon Silk Manufacturing Company Limited (1992) 196 ITR 149 S.C.. The upshot of the above discussion is that Section 80 HHD does not admit an ambiguity and on its plain language it is but obvious that for the purposes of deduction under Section 80HHD receipts of room rent from foreign tourists in the convertible foreign exchange, subject to the fulfillment of other conditions is to be taken into consideration for the purposes of deduction. Neither the main section nor the Explanation supports the view point as canvassed by the Revenue. The Income Tax Appellate Tribunal has rightly reached to the conclusion that the provisions for amenity in the nature of rooms is an integral part of hotel business ..... X X X X Extracts X X X X X X X X Extracts X X X X
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