9911796707
TMI Blog2000 (11) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... gs and order of the High Court of Karnataka, the assessee sought leave to file its rebutted reply the those documents, etc., which has been allowed. We have considered the arguments advanced by the parties, materials available on the record and have gone through the order impugned as well as the decisions cited by the parties. 3. The appeals of the assessee he against the order of the CIT(A)-I, Bangalore, dt. 23rd June, 1999, on fourteen common grounds. The assessee also raised additional grounds at the time of hearing this appeal. The grounds are argumentative. 4. In their above three appeals for the asst. yr. 1994-95, 1995-96 and 1996-97, the Department has impugned the order, dt. 23rd June, 1999, of the CIT(A) mainly on the grounds that the CIT(A) has erred in following the decision of the Himachal Pradesh High Court in the case of Himachal Pradesh Tourism Development Corporation Ltd. vs. Union of India (1999) 156 CTR (HP) 480 . (1999) 104 Taxman 1 (HP), Since the facts of this case are distinguishable from that of the case of the assessee; in the case of the assessee, the hotel comes in the star category whereas in the case of HPTDCL, their hotels consisted of dormitories a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artly allowed the appeals for the asst. yrs. 1994-95 and 1995-96; regarding their expenditure-tax for the asst. yr. 1996-97 the CIT(A) was of the view that it may require recomputation as mentioned in para 35.3 of its order in case the assessee submits the necessary details and bring the case for recomputation in accordance with the directions read with that at para 35.2 of the order. The appeals for the asst. yrs. 1997-98 and 1998-99 were dismissed. Against these common orders of the CIT(A) for the aforesaid assessment years the assessee has preferred the present second appeals before us. 6. In the original ground No. 2 of its appeals, the assessee has raised the validity of service of the notice under s. 11 of the Act. According to the assessee the CIT(A) should have annulled the assessment as one without jurisdiction. He should not have upheld the validity of the order on the ground that the return filed by the assessee was voluntary return filed under s. 8(3) of the Expenditure Tax Act. According to the assessee he has totally overlooked the fact that the assessee never filed any return under s. 8(3) of the Expenditure-tax Act as it was filed under the protest. The issue of n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who were entitled to occupy the rooms, suites to arrive at the charges per person per day. This contention appears to be not only primarily incorrect but to give go-bye to the correct facts. The assessee owns a hotel. According to it the hotel is situated in a hilly area coming within the purview of s. 80-IA(5)(ii) of the IT Act. The approval of the prescribed authorities under s. 80-IA(4)(iii) of the IT Act, 1961, is with reference to other places as the Central Government specified and not to a hotel in hilly area and, therefore, there was no application under s. 4 of the Expenditure Tax Act to levy the expenditure-tax. In response to the submissions of the Department; in view of the certificate issued by the Survey of India that the height of Bangalore City Railway Station is at 902 mts. and Bangalore Airport is at 899 mts, the assessee contended that Bangalore does qualify for deduction as hilly area. The assessee's further contention is that the hotel in question is not situated in these two localities of the sprawling city of Bangalore which is not only a hilly area but a place of pilgrimage too and these two locations are in the valleys of undulated Bangalore. The assesses's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y premises but the interpretation of the words any or all does not make any difference. 8. The assessee again averred in original ground No. 11 of the appeal without prejudice as while computing the expenditure of chargeable expenditure the Department should have excluded the receipt from restaurants, conference hall, bar, etc. as they were not taken in lieu of s. 3(2) of the Expenditure Tax Act. According to the assessee the quantum of chargeable expenditure computed is arbitrary arid excessive and liable to be reduced substantially. The assessee has denied the liability to be assessed to pay interest under s. 14 of the Expenditure Tax Act under the facts and in the circumstances of the case. Charging of interest under s. 14 is an automatic statutory provision because of not making the payment of expenditure-tax collected within time to the Government. 9. From the above narrated averments from the grounds of appeal it would become quite clear that according to the assessee firstly it is not liable to pay expenditure-tax; secondly if it is held it is liable to pay such tax then, it should not be levied on other charges or on the discounts given to the customers and other servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd continental food for the sale to the customers in the restaurant. The foods prepared in the other restaurants are not served at all. Separate bill are issued in the name of this restaurant itself for the restaurant business. This restaurant is also separate from the other restaurants. According to the assessee, trade routes (bar) was started in October, 1996 in the ground floor of the composite building. There is no separate kitchen as no food is served. The foods prepared in other restaurants are sometimes served at the specific request of the customers. Snacks, which are purchased like chips, peanuts, etc. are sold to the customers against payment. Separate bills of the bar are issued and the assessee claims this a separate business from other business. 12. According to the assessee, conference halls (chancery, committee, conclave, chambers, cabinet and council) are in the cellar portion of the composite building. Food is served by various restaurants depending upon the type of food ordered by the customers in these conference halls. 13. According to the assessee hotel rooms are provided for the purposes of residential accommodation in several units or suites. This activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in the order. Accordingly, the AO levied the expenditure-tax on the assessee. The assessee is one owner for all the units in the composite hotel building. It was submitted that the definition of hotel is not inclusive definition as a building or part of the building where residential accommodation by way of business is provided for monetary consideration as per s. 2(6) of the ET Act. It would be incorrect to imagine that the customers who visit and stay in the rooms owned by the assessee would like to stay without any privacy and independent portion of premises. So having provided certain amenities in the rooms like bath room, furniture, double cots, etc. does not mean that the assessee is not a owner of the entire composite building but he is the owner of certain rooms only. This contention would be contradictory in itself first to say that the assessee is the owner of the entire composite building; again there are separate portions of premises like rooms, suites, restaurants, etc. The hotel contains all the portions such as rooms, kitchens, restaurants, bar and conference halls, etc. It would be incorrect to imagine restaurants are not provided in the independent rooms. Nowhe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tomer against fixed charges. Hence, claiming room charges per individual does not become a correct proposition to deny the liability to pay expenditure-tax. Charging of tariff has to be considered from room to room and not from individual to individual. It was submitted on behalf of the assessee that the word 'any' has to be differently construed in different manner as per ss. 3 and 5 of the ET Act. If the applicability is construed by considering each room as a hotel and applicability is tested on the anvil of the tariff at the time of incurring the expenditure, the section becomes workable, meaningful and not defeating the legislative intent according to the harmonious interpretation of the statutes. The AO has worked and in accordance with the provisions of law. His working is not against the provisions of s. 3 and 5 of the ET Act. He has given a correct meaning in accordance with the legislative intention. Therefore, twisting his action in different manner only to enable the assessee to have benefit does not mean the AO and the first appellate authority have not applied their minds for not understanding the law correctly and the action taken by them is neither meaningless or in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oning and lighting. The facilities like telephone, etc. provided in the room are separately metered and charged and, therefore, for attracting the levy the authorities below ought to have taken into consideration the room tariff collected at the time of expenditure on room to room basis and on occasion to occasion basis and not in a total manner. 18. Sees. 2 and 5 of the ET Act have to be interpreted independently to arrive to a harmonious construction of the legislative intention. The interpretation should be straightforward and meaningful. The interpretation need not be twisted either to take benefit or to give benefit. Therefore, the arguments advanced by the assessee cannot be accepted to treat that every room is a separate hotel. As already discussed the assessee-company is a trustee or agent of the Government in collecting the tax. Having discharged such function of collecting the tax from the customers, the assessee cannot now start interpreting the Expenditure Tax Act, twist it and contend that applicability of ET Act is not properly done. Having charged a tariff of Rs. 1,500 to 1,950 per day the assessee-company is bound to get attracted by the ET Act, and supposed to co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the return within the time allowed under sub-s. (1) or sub-s. (2) or having furnished a return under sub-s. (1) or sub-s. (2) discovers any omission or wrong statement therein, may furnish a return or a revised return, as the case may be, at any time before the assessment is made." 21. The CIT(A) has considered in detail the contentions put forward before him on behalf of the assessee in para 11.2 to come to a conclusion that returns were valid as voluntary returns. He has also considered the provisions of s. 13(1) regarding the time-limit for completion of assessments. No order of assessment shall be made under s. 9 or 10 at any time after the expiry of 4 years from the end of the assessment year in which the chargeable expenditure was first assessable or one year from the date of the filing of the return or revised return under s. 8 whichever is later. He held that as the orders were passed on 17th March, 1999, under s. 9(2) of the Act, they are well within the time-limit prescribed. He has considered the analogy of issue of notice under s. 148 of the IT Act as a condition precedent for exercising the jurisdiction by the AO and it does not confer any right which can be waived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e husband and wife for purposes of expenditure-tax would not be meaningful. The AO gave clear reasons as to why the claim of the assessee to deduct 40 per cent from the room charges for providing breakfast, etc. should be rejected. The assessee was not able to refute the evidence recorded and the arguments of the AO successfully. The assessee claimed to have followed a scheme different from what is followed by all other hotels in India. Having found that the assessee did not discharge the onus, the CIT(A) concurred with the finding and action of the AO. He did not accept the condition that the room charges for the double rooms and suites are to be divided by the tariff by the number, of occupants permitted to occupy the same. He also did not accept the contention of the assessee that the number of rooms in a suite were more than one and the number of permitted occupants in the suites were more than one. 24. He relied in support of this finding on the decision of High Court of Himachal Pradesh in the case of H.P. Tourism Development Corporation vs. Union of India. He did not find any difference between the stand taken by the assessee and the appellant herein. He has reproduced the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure in the hotel. He considered that their expenditure must be commensurate and of the ostentatious type. In the circumstances, he held that it may not be correct to treat the expenditure in the hotel as predominantly of ordinary type, except in the case of occupants of suites. He found this as the factual difference between the hotels of Himachal Pradesh and the assessee. Due to this material difference he held that room charges in majority units were more than the threshold limit of Rs. 1,200 per unit and there was a case for treating all the expenditure incurred in the hotel as such and falling within the purview of s. 5 of the ET Act. He considered this because the wording of s. 3 gives clear scope to think that it is the chargeable expenditure incurred in a hotel fulfilling the conditions that are liable to expenditure-tax and when the majority of the hirers of room pays room charges above the specified limit, the hotel which caters mainly to their needs must be having the level of the expenditure corresponding to the needs of these ostentatious spenders. Considering the table of room charges mentioned by him at para 30 of his order, he held that for the asst. yr. 1994-95 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the second half of the previous year relevant to the asst. yr. 1996-97 should apply equally for the asst. yr. 1997-98, the first half of the previous year relevant to the asst. yr. 1997-98 and with greater force for the second half of the previous year relevant to the asst. yr. 1998-99. Thus, he partly allowed the appeals of the assessee for the asst. yrs. 1994-95 and 1995-96. He held that the expenditure-tax for the asst. yr. 1996-97 required recomputation as mentioned in para 35.3 of his order on assessee's submitting necessary details and bringing a case for recompilation in accordance with the directions given in para 35.3 of his order. Thus he dismissed the assessee's appeal for the asst. yrs. 1997-98 and 1998-99. 28. The learned Departmental Representative argued that the assessee collected expenditure-tax and paid it to some extent into the Government account. According to him the submissions made on behalf of the assessee are contrary and they have no basis and they are an afterthought contentions. He has also brought to the notice of the Tribunal of appellant's filing a writ petition bearing Nos. 12596 and 13393 of 2000. The Hon'ble Karnataka High Court disposed of those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e out of station most of the time in the past week, I could not comply with the requirements contained in the above referred letter. Therefore, I hereby request your honour to grant me time till the end of this month (31st Jan., 1999) to comply with your honour's above referred notice/letter and for which act of kindness of your honour, I will be always grateful to your honour." 30. The time was allowed till 31st March, 1999, to file the expenditure-tax returns. From this is would be clear that there is no substance in the assessee's contention of not receiving the valid notice. A prosecution proceeding under s. 25 of the ET Act was tried to be initiated against the assessee. It appears just and proper to reproduce the assessee's reply to the-show cause notice of prosecution proceedings hereunder: "We have for acknowledgment your honour's letter, dt. 22nd Jan., 1999, granting us time till 31st Jan., 1999, to comply with your honour's notice, dt. 12th Jan., 1999. However, due to circumstances discussed hereunder, we will not be able to comply with your honour's notice by 31st Jan., 1999 and beg to submit as under. Our managing director, Mr. A.S. Chinnaswamy Raju is away at New ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to do so. The exact liability towards expenditure-tax payable as at 31st March, 1996, had to be substantially reconstructed as a consequence of the complete malfunctioning/breakdown of the computer system and the installed computer program. Further several of the bills, vouchers were badly damaged on account of seepage of water in the underground basement area wherein the said hills vouchers/books records were stored". 32. Ultimately the returns declaring nil as chargeable expenditure were filed on 12th Feb., 1999, with a nomenclature on the top of the return of expenditure. However, the returns were filed under the stated protest in pursuance of notice under the ET Act. Several details were furnished. The AO asked the assessee to furnish the details as under: "Apart from above, in connection with your claim in the return of expenditure-tax, you may produce any documents or other material, which you feel may prove your claims submissions in the returns latest by 16th Feb., 1999 at 11.00 A.M. Your failure to file the details by that date shall mean that you do not have any details to, produce and the assessment shall be completed on the basis of the information available in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR (Del) 161 : (1993) 202 ITR 249 (Del). According to him the only requirement in law in initiating the proceedings under s. 148 is that there must be reasons to justify the belief that there is escapement of income or suppression of income. The requirement is only so far and no further, and the requirements of quasi judicial determination do not govern the proceedings at the stage of issuing a notice, as per the judgment of Kerala High Court in Dr. V. Mohan Das vs. Dy. CIT (1991) 188 ITR 727 (Ker) at p. 729. The exercise of a power by an authority is referable to a jurisdiction which confers validity upon it and not to a jurisdiction under which it would be nugatory as per the decisions in CIT vs. Gulab Rai Govind Prasad (1972) 85 ITR 308 (All) and Rajender Nath vs. CIT (1979) 12 CTR (SC) 201 : (1979) 120 ITR 14 (SC). He has also relied on the decisions reported in 101 STC 94 at p. 95 and ITO vs. Biju Patnaik (1991) 91 CTR (SC) 95 : (1991) 188 ITR 247 (SC) at p. 251 to the effect that the requisite conditions can be substantiated even from the recorded reasons and that the validity of a reassessment notice under s. 148 can be sustained on the basis of recorded reasons even when no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Finance Act, 1964 (5 of 1964) enacted that notwithstanding anything contained in s. 13 of the Finance (No. 20 Act, 1962), expenditure-tax shall be charged under the Expenditure Tax Act, 1957 (29 of 1957), for every financial year commencing on or after 1st day of April, 1996. However, the Expenditure Tax Act, 1957 (29 of 1957) was repealed w.e.f. 1st day of April, 1966, by s. 40 of the Finance Act, 1966 (13 of 1966). He summed up the levy of expenditure-tax under Expenditure Tax Act, 1957 and submitted that the said Act remained operative for the financial years 1958-59 to 1961-62 and 1964-65 and 1965-66. Under that Act, levy was in respect of the expenditure incurred by any individual or HUF in the relevant previous year It may be better to mention that as a result of the enactment of the Hotel Receipt Tax Act, 1980 (54 of 1980) the levy of hotel receipts tax was imposed on every person carrying on the business of a hotel situated in India, wherein the room charges for residential accommodation provided to any person any time during the previous year were Rs. 75 or more per day per individual. Such levy was in respect of chargeable receipts accruing or arising or received during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f consequences, according to the learned Departmental Representative, as decided in the case of Narayanaswami vs. Emperor AIR 1939 PC 47. Another decision relied on by the learned Departmental Representative is the decision reported in 1 SCR 896 : AIR 1961 SC 1559 wherein it is held that if the words of a statute are in themselves precise and unambiguous no more is necessary than to expound those words in their natural and ordinary sense, the words themselves in such cases best declaring the intention of the legislature. It is an equally well settled principle of construction that where alternative constructions are equally open that alternative is to be chosen which will be consistent with the smooth working of the system which the statute purports to be regulating and that alternative is to be rejected which will introduce uncertainty, friction or confusion into the working of the system. In yet another case reported in 4 SCC 22 it is held "Where the legislature clearly declares its intent in the scheme of a language of the statute it is the duty of the Court to give full effect to the same without scanning its wisdom or policy and without engrafting, adding or implying anything ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies for air-conditioning. He has cited the decision Hotel Mansarovar vs. Union of India Ors. (1995) 123 CTR (AP) 576 : (1995) 213 ITR 668 (AP). So far, as the unit is concerned, he has cited from Concise Oxford Dictionary 1990 Edn. wherein "Unit" is defined la an individual thing, person, or group regarded as single and complete, esps. for purposes of calculation; breach of the (smallest separate individuals or groups into which a complex whole may be analysed (the family as the unit of society). 2a. quantity chosen as a standard in terms of which other quantities may be expressed (unit of heat; SI unit; mass per unit volume 3 Brit. The smallest share in a unit trust. 4a. device with a specified function forming part of a complex mechanism. 5a. piece of furniture for fitting with others like it or made of complementary parts. 6a. group with a special function in an organisation. 7a. group of buildings, wards, etc. in a hospital a 8 the number "one" unit cell Crystallog the smallest repeating group of atoms, is, or molecules in a crystal. Unit cost the cost of producing one item of manufacture. Unit-holder Brit. A person with a holding in a unit trust, unit price the price charged ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
