Ita/1033/2009 Of The Commissioner Of Income Tax v. M/S.manaltheeram Beach Resort

IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON THURSDAY ,THE 25TH DAY OF OCTOBER 2018 / 3RD KARTHIKA, 1940 ITA.No. 1033 of 2009 AGAINST THE ORDER/JUDGMENT IN OTHERS 6/2007 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 04-09-2008 APPELLANT/S: THE COMMISSIONER OF INCOME TAXKOCHI BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/S: M/S.MANALTHEERAM BEACH RESORTCHOWARA PO, BALARAMAPURAM,THIRUVANANTHAPURAM BY ADVS. SRI.E.K.NANDAKUMAR (SR.)SRI.P.GOPINATHSRI.RAMESH CHERIAN JOHN THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 25.10.2018, ALONG WITH ITA.1102/2009, ITA.1130/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON THURSDAY ,THE 25TH DAY OF OCTOBER 2018 / 3RD KARTHIKA, 1940 ITA.No. 1102 of 2009 AGAINST THE ORDER/JUDGMENT IN OTHERS 8/2007 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 04-09-2008 APPELLANT/S: THE COMMISSIONER OF INCOME TAX(CENTRAL) COCHIN. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/S: M/S.MANALTHEERAM BEACH RESORTCHOWARA P.O,BALARAMAPURAM,THIRUVANANTHAPURAM. BY ADVS.SRI.E.K.NANDAKUMAR (SR.)SRI.K.JOHN MATHAISRI.P.BENNY THOMASSRI.P.GOPINATHA MENONSRI.RAMESH CHERIAN JOHN OTHER PRESENT: SRI PKR MENON SR COUNSEL FOR GOI TAXES THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 25.10.2018, ALONG WITH ITA.1130/2009, ITA.1033/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON THURSDAY ,THE 25TH DAY OF OCTOBER 2018 / 3RD KARTHIKA, 1940 ITA.No. 1130 of 2009 AGAINST THE ORDER/JUDGMENT IN OTHERS /2007 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 04-09-2008 APPELLANT/S: THE COMMISSIONER OF INCOME TAX (CENTRAL)(CENTRAL),COCHIN BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/S: M/S.MANALTHEERAM BEACH RESORTCHOWARA P.O. BALARAMAPURAM,, THIRUVANANTHAPURAM . BY ADVS. SRI.E.K.NANDAKUMAR (SR.)SRI.P.GOPINATHSRI.RAMESH CHERIAN JOHN OTHER PRESENT: SRI PKR MENON SR COUNSEL FOR GOI TAXES THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 25.10.2018, ALONG WITH ITA.1102/2009, ITA.1033/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA No.1033/2009 & con. ITA Nos.1033/2009,1102/2009 &1130/2009 J U D G M E N T The appeals arise from a common order ofthe Tribunal. In fact we notice that the Tribunalhad considered four assessment years from 1998-99to 2001-2002. The appeal is only as against threeyears from 1999-2000 to 2001-2002. The issue aroseunder the Expenditure Tax Act, 1987. The assesseebefore the Tribunal contended that assessments havebeen made without looking into the detailsavailable on record and treating the entirecollection of the assessee as taxable withoutverifying whether the rental income from differentrooms are below or above the taxable limit. TheTribunal found that the room rents were collectedin the name of a group leader and hence theAssessing Officer clubbed all the rent together aspayable by one individual. However, withoutlooking into the facts, the Tribunal on a ITA No.1033/2009 & con. suggestion made to the representative of theassessee that the appeals would be disposed of on afair basis reduced the expenditure assessed withoutany rational basis and without applying any uniformproportion to the reduction made. We are unable tofind any fair basis on which such reduction wasmade much less any statutory sanction for the same. ITA No.1033/2009 & con. suggestion made to the representative of theassessee that the appeals would be disposed of on afair basis reduced the expenditure assessed withoutany rational basis and without applying any uniformproportion to the reduction made. We are unable tofind any fair basis on which such reduction wasmade much less any statutory sanction for the same. 2. We agree with the finding of theTribunal that the Assessing Officer ought to havemeticulously considered the manner in which thecharges for individual rooms were levied and how theroom rents cannot be clubbed together. However, wehave a different view on the observation made by theTribunal with respect to the assessee having chargedmore per room, in excess of the chargeable rate;which we assume is the published tariff. It is thenfor the assessee to establish that the amounts werecharged for services that do not come under the“chargeable expenditure”. If that cannot be provedthen definitely it has to be presumed to be ITA No.1033/2009 & con. room rent itself. The Tribunal also noticed thatfor the assessment year 2001-02 there is noseparate details furnished as to the room rentcollected and also as to receipt of charges forayurveda treatment, restaurant receipts, yogareceipts miscellaneous receipts and culturalreceipts etc. The Tribunal would have to furtherdecide which of these heads are covered under the“chargeable expenditure” as spoken of in Section 5of the Expenditure Tax Act, 1987. Many of theseheads have been included under the the Kerala Taxon Luxuries Act,1976 wherein the levy is on the“charges for luxury”. 3. We also have to notice the judgment ofthe Hon'ble Supreme Court in Federation of Hoteland Restaurant Association of India v. Union ofIndia ((1989) 3 SCC 634)wherein the challengecame with respect to the levy of expenditure taxand luxury tax on the very same component. TheHon'ble Supreme Court found on the basis of the ITA No.1033/2009 & con. aspect theory, that those are levies on differentaspects which the Center and the State levied underthe respective legislative powers available tothem. These aspects would have to be definitelyconsidered by the Tribunal when deciding as to whatis includable under expenditure as defined underthe Expenditure Act, and reference could also bemade to the authorities under the Tax on LuxuriesAct, which are aplenty. Without such an exercise,there can be no reduction on a fair basis as hasbeen attempted by the Tribunal. We hence remandthe issue to be considered afresh by the Tribunalafter looking into the law and the facts asavailable in the respective years. 4. The appeals are allowed without anyobservation on merits, but remanding back for freshconsideration which consideration be madeuntrammeled by any observations made on a referenceto the Tax on Luxuries Act made herein above whichare only prima facie in nature. We made this ITA No.1033/2009 & con. reservation since we have not compared the charge and the nature of the facilities/services covered under the two enactments; lest we pre-empt such aconsideration first by the statutory authority. There shall be no order as to costs. Sd/- K. Vinod Chandran, Judge Sd/- jma Ashok Menon, Judge APPENDIX OF ITA 1033/2009 PETITIONER'S/S EXHIBITS: ANNEXURE ATRUE COPY OF THE ASSESSMENT ORDERANNEXURE BTRUE COPY OF THE ORDER OF CIT (APPEALS)ANNEXURE CTRUE COPY OF THE ORDER OF THE ITAT ANNEXURE BANNEXURE CANNEXURE D TRUE COPY OF THE CIRCULAR NO.5/2008 DATED 15.05.2008 APPENDIX OF ITA 1102/2009 PETITIONER'S/S EXHIBITS: ANNEXURE ATRUE COPY OF THE ASSESSMENT ORDER DT.29.12.2006 ANNEXURE BTRUE COPY OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) DATED 24.09.2007 ANNEXURE CTRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 04.09.2008 ANNEXURE D TRUE COPY OF THE CIRCULAR NO.5/2008 DATED 15.05.2008 APPENDIX OF ITA 1130/2009 PETITIONER'S/S EXHIBITS: There shall be no order as to costs. Sd/- K. Vinod Chandran, Judge Sd/- jma Ashok Menon, Judge APPENDIX OF ITA 1033/2009 PETITIONER'S/S EXHIBITS: ANNEXURE ATRUE COPY OF THE ASSESSMENT ORDERANNEXURE BTRUE COPY OF THE ORDER OF CIT (APPEALS)ANNEXURE CTRUE COPY OF THE ORDER OF THE ITAT ANNEXURE BANNEXURE CANNEXURE D TRUE COPY OF THE CIRCULAR NO.5/2008 DATED 15.05.2008 APPENDIX OF ITA 1102/2009 PETITIONER'S/S EXHIBITS: ANNEXURE ATRUE COPY OF THE ASSESSMENT ORDER DT.29.12.2006 ANNEXURE BTRUE COPY OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) DATED 24.09.2007 ANNEXURE CTRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 04.09.2008 ANNEXURE D TRUE COPY OF THE CIRCULAR NO.5/2008 DATED 15.05.2008 APPENDIX OF ITA 1130/2009 PETITIONER'S/S EXHIBITS: ANNEXURE ATRUE COPY OF THE ASSESSMENT ORDER DT 30.03.2006 ANNEXURE BTRUE COPY OF THE ORDER OF CIT (APPEALS)DATED 24.09.2007 ANNEXURE CTRUE COPY OF THE ORDER OF THE ITAT DT 04.09.2008 ANNEXURE D TRUE COPY OF THE CIRCULAR NO. 5/2008 DATED 15.05.2008