The Travel & Tourism Association Of Goa v. Road, Panaji Goa

1 wp94-02-txas21-10ors dt. 30.08.19 Santosh IN THE HIGH COURT OF BOMBAY AT GOA WRIT PETITION NO.94 OF 2002 1. The Travel & Tourism Association of Goa,having its registered office at 404, RaiyuChambers, Dr. Atmaram Borkar Road,Panaji, through its Vice President, Shri Gaurish Manohar Dhond,major in age, residing at Manoshanti Complex,D. V. Road, Panaji Goa. 2. Mandovi Hotels Pvt. Ltd.,a company duly registered under the IndianCompanies Act, 1956, having its registeredoffice at Panaji Goa, through its Director,Shri Ramnath V. Keny, residing at Dona Paula, Goa. 3. Shri Ramnath Vaman Keny,Citizen of India, shareholder and Director,Mandovi Hotels Pvt. Ltd.,residing at Dona Paula, Goa. …. Petitioners. Versus 1. Union of India(through the Standing Counsel for the Union of India ) 2. The Commissioner of Income Tax,having his office at Aayakar Bhavan,Pato, Panaji Goa. 3. The Joint Commissioner of Income Tax, 2 wp94-02-txas21-10ors dt. 30.08.19 (Assessment), Special Range, Panaji,Aayakar Bhavan, Pato, Panaji Goa. …... Respondents. Mr. H. D. Naik, Advocates for the Petitioners. Ms. Susan Linhares, Standing Counsel for the Respondent. WITH TAX APPEAL NO.21 OF 2010 Fomento Resorts and Hotels Ltd,a Company incorporated under theprovisions of the Companies Act, 1956and having its registered Office atCidade De Goa Beach Resort,Vainguinim Beach, Goa – 403 004through its Secretary Mr. I.B. Muchandi. .... Appellant. Versus The Assistant Commissioner ofIncome-Tax, Central Circle, Panjimhaving his address at Panjim, Goa..... Respondent Mr. Rafiq Dada, Senior Advocate with Mr. Nishant Thakkar, Ms.Jasmin Amalsadvala and Ms. Vinita Palyekar, Advocates for theAppellant. Ms. Susan Linhares, Standing Counsel for the Respondent. WITH TAX APPEAL NO.32/2006 Fomento Resorts and Hotels Ltd,a Company incorporated under theprovisions of the Companies Act, 1956and having its registered Office at 3 wp94-02-txas21-10ors dt. 30.08.19 Cidade De Goa Beach Resort,Vainguinim Beach, Goa – 403 004. .... Appellant. V/s. 1. Income Tax Appellate Tribunal, Panaji Bench, Panaji. (Respondent no.1 deleted from cause title as per Order dated 13/3/2007 in MCA 29/07. 2. The Joint Commissioner of Income-Tax, (Assessment), Special Range, Panaji, having his address at Panaji, Goa. .... Respondents Mr. Rafiq Dada, Senior Advocate with Mr. Nishant Thakkar, Ms.Jasmin Amalsadvala and Ms. Vinita Palyekar, Advocates for theAppellant. Ms. Susan Linhares, Standing Counsel for the Respondent. WITH TAX APPEAL NO.53 OF 2007 Averina International Resorts Ltd.,Garden View Bldg., Phase II, …Margao Goa. Appellant Versus Assistant Commissioner of Income-Tax, Circle 1, Margao - Goa. .... Respondent Mr. Mihir Naniwadekar with Ms. Vinita Palyekar, Advocates for the Appellant. Ms. Susan Linhares, Standing Counsel for the Respondent. 4 wp94-02-txas21-10ors dt. 30.08.19 WITH TAX APPEAL NO.54 OF 2007 Averina International Resorts Ltd., Garden View Bldg., Phase II, Margao, Goa. .... Appellant. Versus Assistant Commissioner of Income-Tax, Circle 1, Margao - Goa..... Respondent Mr. Mihir Naniwadekar with Ms. Vinita Palyekar, Advocates for the Appellant. Ms. Susan Linhares, Standing Counsel for the Respondent. WITH TAX APPEAL NO.55 OF 2007 Averina International Resorts Ltd., Garden View Bldg., Phase II, Margao, Goa. .... Appellant. Versus Assistant Commissioner of Income-Tax, Circle 1, Margao - Goa..... Respondent Mr. Mihir Naniwadekar with Ms. Vinita Palyekar, Advocates for theAppellant. Ms. Susan Linhares, Standing Counsel for the Respondent. WITH TAX APPEAL NO.64 OF 2007 Fomento Resorts & Hotels Ltd, 5 wp94-02-txas21-10ors dt. 30.08.19 Garden View Bldg., Phase II, Margao, Goa. .... Appellant. Versus Assistant Commissioner of Income-Tax, Circle 1, Margao - Goa..... Respondent Mr. Mihir Naniwadekar with Ms. Vinita Palyekar, Advocates for the Appellant. Ms. Susan Linhares, Standing Counsel for the Respondent. WITH TAX APPEAL NO.55 OF 2007 Averina International Resorts Ltd., Garden View Bldg., Phase II, Margao, Goa. .... Appellant. Versus Assistant Commissioner of Income-Tax, Circle 1, Margao - Goa..... Respondent Mr. Mihir Naniwadekar with Ms. Vinita Palyekar, Advocates for theAppellant. Ms. Susan Linhares, Standing Counsel for the Respondent. WITH TAX APPEAL NO.64 OF 2007 Fomento Resorts & Hotels Ltd, 5 wp94-02-txas21-10ors dt. 30.08.19 a Company incorporated under theprovisions of the Companies Act, 1956and having its registered Office atCidade De Goa Beach Resort,Vainguinim Beach, Goa – 403 004through its Secretary Mr. I.B. Muchandi. .... Appellant. Versus The Assistant Commissioner ofIncome-Tax, Central Circle, Panjimhaving his address at Panjim, Goa..... Respondent Mr. Rafiq Dada, Senior Advocate with Mr. Nishant Thakkar, Ms.Jasmin Amalsadvala and Ms. Vinita Palyekar, Advocates for theAppellant. Ms. Susan Linhares, Standing Counsel for the Respondent. WITH TAX APPEAL NO.69 OF 2007 Fomento Resorts & Hotels Ltd,a Company incorporated under theprovisions of the Companies Act, 1956and having its registered Office atCidade De Goa Beach Resort,Vainguinim Beach, Goa – 403 004through its Secretary Mr. I.B. Muchandi. .... Appellant. Versus The Assistant Commissioner ofIncome-Tax, Central Circle, Panjimhaving his address at Panjim, Goa. .... Respondent 6 wp94-02-txas21-10ors dt. 30.08.19 Mr. Rafiq Dada, Senior Advocate with Mr. Nishant Thakkar, Ms.Jasmin Amalsadvala and Ms. Vinita Palyekar, Advocates for theAppellant. Ms. Susan Linhares, Standing Counsel for the Respondent. Coram : M.S. Sonak & Nutan D. Sardessai, JJ. Reserved on : 2[nd] August, 2019. Pronounced on : 30[th] August, 2019. J U D G M E N T :(Per M.S. SONAK, J.) Heard Mr. Rafiq Dada, learned Senior Advocate with Mr.Nishant Thakkar and Ms. Vinita Palyekar for the Appellants in TaxAppeals No.21/2009, 32/2006, 64/2007 and 69/2007. 2.Heard Mr. H.D. Naik for the Petitioners in Writ PetitionNo.94/2002. 3.Heard Mr. Mihir Naniwadekar with Ms. Vinita Palyekar forthe Appellant in Tax Appeals No.53, 54 and 55 of 2007. 4. Heard Ms. Susan Linhares, learned Standing Counsel forthe Respondents in the Appeals, as well as the Writ Petition. 5. In all these appeals and the writ petition,the common issuerelates to the interpretation of the provisions in Section 3(1) of the 7 wp94-02-txas21-10ors dt. 30.08.19 Expenditure Tax Act, 1987 (said Act). In Tax Appeals No.53, 54 and55 of 2007, there is an additional issue raised in the context of theproviso to Section 4(a) of the said Act. The learned Counsel for theparties request that Tax Appeal No.32 of 2006 be treated as the leadmatter in respect of the common issue and Tax Appeal No.53 of2007, in respect of the additional issue. We do so accordingly. 6.Tax Appeal No.32/2006 came to be admitted by this Courtvide order dated 21 August 2006, on the following substantialquestions of law. " Whether in view of the express provisions of section 3of the Expenditure-tax Act, the Hon'ble Income-taxAppellate Tribunal ought to have held that in a case(like the Appellant) where the room charges were lessthan Rs.1,200/- per day per individual, no expendituretax would be chargeable at all ? " 7.The Judgment and Order of the Income Tax AppellateTribunal (ITAT) dated 4.4.2006, which is subject-matter of challengein this Appeal, relates to Assessment Years 1995-96 and 1996-97.This means that the impugned Judgment and Order dated 4.4.2006made by the ITAT, is a common Judgment and Order in relation tothe Assessment Years 1995-96 and 1996-97. 6.Tax Appeal No.32/2006 came to be admitted by this Courtvide order dated 21 August 2006, on the following substantialquestions of law. " Whether in view of the express provisions of section 3of the Expenditure-tax Act, the Hon'ble Income-taxAppellate Tribunal ought to have held that in a case(like the Appellant) where the room charges were lessthan Rs.1,200/- per day per individual, no expendituretax would be chargeable at all ? " 7.The Judgment and Order of the Income Tax AppellateTribunal (ITAT) dated 4.4.2006, which is subject-matter of challengein this Appeal, relates to Assessment Years 1995-96 and 1996-97.This means that the impugned Judgment and Order dated 4.4.2006made by the ITAT, is a common Judgment and Order in relation tothe Assessment Years 1995-96 and 1996-97. 8.In so far as the Assessment Year 1995-96 is concerned, the 8 wp94-02-txas21-10ors dt. 30.08.19 ITAT had, in fact, allowed the Appellant’s Appeal and set aside thenotice of reopening of the assessment on the ground that theAssessing Officer, despite demand, had failed to furnish reasons forreopening of the assessment. This part of the ITAT’s order wasquestioned by the Respondent by instituting Tax AppealNo.71/2006, which came to be dismissed vide Order dated27.11.2006. The Respondent’s Special Leave Petition, against thisCourt’s order dated 27.11.2006, also came to be dismissed on16.7.2007. Therefore, though the challenge in this Appeal, is to thecommon Judgment and Order made by the ITAT on 4.4.2006, it isclarified that in this Appeal, we are only concerned with theassessment for the Assessment Year 1996-97. 9.The brief facts, in which the aforesaid substantial questionof law arises for determination in this Appeal, are as follows : (A) For the Assessment Year 1996-97, the Appellants filed return oftaxable expenditure at rupees Nil. (B) The Appellants were, however, required by the Assessing Officerto file a statement of receipts, which were chargeable to expendituretax as per the ratio of the decision of Himachal Pradesh High CourtinHimachal Pradesh Tourism Development Corporation vs. Unionof India and ors[1 ](HPTDC). 9 wp94-02-txas21-10ors dt. 30.08.19 (C) The Assessing Officer, after rejecting the contention of theAppellants that the Himachal Pradesh High Court’s decision wasinapplicable to them, by assessment order dated 27.2.2007, broughtto charge taxable expenditure of ₹ 9,70,53,682/-. (D) The Appellants, aggrieved by the assessment order dated27.2.2001, appealed to the Commissioner of Income Tax (Appeals)at Belgaum, which appeal came to be dismissed by the CIT(Appeals) vide order dated 20.2.2002; (E) The Appellants, thereupon appealed to the Income Tax Appellate Tribunal (ITAT) which appeal, again, came to be dismissed videcommon Judgment and Order dated 4.4.2006. (F) Hence, the present Appeal which, as indicated earlier, is restrictedto the Assessment Year 1996-97. 10. Mr Dada, learned Senior Advocate for the Appellant,submits that the assessing authorities erred in placing blind relianceupon the decision of the Himachal Pradesh High Court in HPTDC(supra) when, in fact, the same was distinguishable on facts. Hesubmits that in the said case, room tariff was fixed under a statute.Further, the Himachal Pradesh High Court did not have the benefitof amendment to the said Act, which came into force with effect from1/6/2002. He submits that, based upon these two distinguishingfeatures, the decision in HPTDC (supra) was not at all applicable to 10 wp94-02-txas21-10ors dt. 30.08.19the fact situation in the present matters and the assessing authoritieserred in placing blind reliance upon the same. 10. Mr Dada, learned Senior Advocate for the Appellant,submits that the assessing authorities erred in placing blind relianceupon the decision of the Himachal Pradesh High Court in HPTDC(supra) when, in fact, the same was distinguishable on facts. Hesubmits that in the said case, room tariff was fixed under a statute.Further, the Himachal Pradesh High Court did not have the benefitof amendment to the said Act, which came into force with effect from1/6/2002. He submits that, based upon these two distinguishingfeatures, the decision in HPTDC (supra) was not at all applicable to 10 wp94-02-txas21-10ors dt. 30.08.19the fact situation in the present matters and the assessing authoritieserred in placing blind reliance upon the same. 11.Mr. Dada submits that in any case, the decision inHPTDC (supra) completely ignores the expression “per individual”,appearing in Section 3(1) of the said Act. He submits that theinterpretation placed upon Section 3(1) of the said Act by theHimachal Pradesh High Court is contrary to the literal reading ofthe provisions and also renders the words “per individual”, otioseand redundant. He relies upon Mohammad Ali Khan vs.Commissioner of Wealth Tax[2] to submit that an interpretation,which renders the words in a statute otiose, is unacceptable. Mr.Dada submits that in the present matters, the fact that the tariffcharged for rooms on 'double occupancy basis' is not at all disputedby the Respondents. He submits that once this basic fact is notdisputed, it is apparent that the tariff for an unit of residentialaccommodation is less than ₹ 1200 per day, per individual. Hesubmits that the contrary interpretation adopted by the authoritiesis ex facie unlawful and ultra vires. 12.Mr. Dada submits that in such matters, the burden isalways on the Revenue to demonstrate that the assessee falls within 11 wp94-02-txas21-10ors dt. 30.08.19 the strict letter of the charging provision. He submits that in thepresent case, from the material produced on record by the Appellantwhich, in fact, was not even disputed by the Respondent, it isapparent that the Appellant does not fall within the chargingprovisions. Yet, the assessing authorities, without discharging theburden which is otherwise cast on them, have purported to drag theAppellant into the tax net, which is, ex facie, impermissible. Mr.Dada relies on Dilip Kumar Roy vs. Commissioner of Income Tax[3]in support of the proposition that the burden is always on theRevenue to demonstrate that the Assessee indeed falls within thecharging provision. 13.Mr. Dada submits that in the present case, the assessingauthorities have virtually chosen to tax the Appellant by implication.He submits that in interpretation of taxing statute, strict constructionis what has to be adopted. Taxing statute has to be essentiallyinterpreted on the basis of the language used therein and not de horsthe same. It is impermissible to add any words or to ignore anywords. which appear in the statute. The assessing authorities arerequired to construe fiscal statutes in a fair and reasonable manner,without leaning to one side or the other or stretching theinterpretation wide to cover the assessee who, otherwise, does not 12 wp94-02-txas21-10ors dt. 30.08.19even fall within the ambit of the charging section. In support of thesepropositions, Mr. Dada relies on Orissa State WarehousingCorporation vs. Commissioner of Income Tax[4]; Vikrant Tyres Ltd. vs.Income Tax Officer[5]; Commissioner of Wealth Tax vs. Ellis BridgeGymkhana, etc.etc.[6]; Commissioner of Income Tax vs. Kasturi &Sons Ltd.[7] and Federation of Andhra Pradesh Chambers ofCommerce & Industry & ors. etc. etc. vs. State of Andhra Pradesh &ors[8]. 12 wp94-02-txas21-10ors dt. 30.08.19even fall within the ambit of the charging section. In support of thesepropositions, Mr. Dada relies on Orissa State WarehousingCorporation vs. Commissioner of Income Tax[4]; Vikrant Tyres Ltd. vs.Income Tax Officer[5]; Commissioner of Wealth Tax vs. Ellis BridgeGymkhana, etc.etc.[6]; Commissioner of Income Tax vs. Kasturi &Sons Ltd.[7] and Federation of Andhra Pradesh Chambers ofCommerce & Industry & ors. etc. etc. vs. State of Andhra Pradesh &ors[8]. 14.Mr. Dada submits that the Parliament, on realisation thatthe expression “per individual” in Section 3(1) of the said Act willessentially require the room tariff to be split into two, in case ofdouble occupancy or split into three, in case of triple occupancy has,with effect from 1.6.2002, done away with the expression “perindividual” in Section 3(1) of the said Act. The amendment isexpressly made prospective in nature. Mr. Dada submits that fromthis it is apparent that the law prior to 1.6.2002 very clearly requiresthe acceptance of interpretation now proposed by the Appellant, asopposed to the interpretation made by the Himachal Pradesh HighCourt in HPTDC (supra). Mr. Dada submits that the Himachal 4[237 ITR 589 (SC)] 5[247 ITR 821 (SC)] 6 [229 ITR 1 (SC)] 7 [237 ITR 24 (SC) ]8[247 ITR 36 (SC)] 13 wp94-02-txas21-10ors dt. 30.08.19Pradesh High Court did not have the benefit of this amendmentwhich came into force only on 1.6.2002. He, therefore, submits thatthis is an additional reason why the interpretation now proposed bythe Appellant, deserves acceptance over the interpretation of theHimachal Pradesh High Court in the case of HPTDC (supra). 15.Finally, Mr. Dada submits that even if it is assumed thatprior to the amendment which came into effect from 1.6.2002, therewas an ambiguity in the provisions of Section 3(1) of the said Act,then, the ambiguity is required to be resolved in favour of theAssessee and against the Revenue. Mr. Dada submits that it is settledlaw that in a taxing statute when two views are possible, the viewwhich favour the assessee must be adopted in preference to the viewwhich supports the Revenue. In respect of this proposition, Mr.Dada relies on Commissioner of Income Tax vs. Podar Cement (P)Ltd. etc.[9] 16.For all the aforesaid reasons, Mr. Dada submits that thesubstantial question of law, as framed, is required to be answered infavour of the Assesse and against the Revenue. 17.Mr. H. D. Naik, learned Counsel for the Petitioners in Writ 9[226 ITR 625 (SC)] 14 wp94-02-txas21-10ors dt. 30.08.19Petition No.94/2002 adopts the submissions made by Mr. Dada,learned Senior Advocate appearing for the Appellants in the aforesaidAppeals. 18.Mr. Mihir Naniwadekar, the learned Counsel for theAppellants in Tax Appeals No.53, 54 and 55 of 2007 also adopts thesubmissions of Mr. Dada on the common issue relating tointerpretation of the provisions in Section 3(1) of the said Act. 19. Ms. Susan Linhares, learned Standing Counsel for theRespondents defends the impugned Judgments and Orders on thebasis of the reasonings reflected therein. She places strong relianceupon HPTDC (supra) and submits that even the challenge to the saiddecision before the Hon'ble Supreme Court failed or, in any case, wasnot pursued. She submits that there is no flaw in the view taken bythe Himachal Pradesh High Court and it is incorrect to allege thatthe High Court has failed to take note of the expression “perindividual” as it appears in Section 3(1) of the said Act. She,therefore, submits that there was nothing wrong in the assessingauthorities in placing reliance upon the case of HPTDC (supra).She points out with much vehemence that in fact, the Appellant hadconceded the position that the issue was covered against them inview of HPTDC (supra). She submits that in view of such 15 wp94-02-txas21-10ors dt. 30.08.19 15 wp94-02-txas21-10ors dt. 30.08.19 categorical concession, which has been recorded in the impugnedJudgments and Orders, it is really not open for the Appellant to urgethe same contention before this Court. She submits that in suchsituation, the principle of estoppel clearly applies. 20.Ms. Linhares, without prejudice to the aforesaid, submitsthat the interpretation proposed by the Appellant is neither consistentwith the literal interpretation of Section 3(1) of the said Act, nor willthe same forward the objective of the said Act. She submits that theconstitutional validity of the said Act has been already upheld by theHon'ble Supreme Court in the case of Federation of Hotel &Restaurant Association of India, etc. vs. Union of India and others[10].She submits that the said Act was, therefore, to be permitted tooperate fully and its provision cannot be so interpreted, as to truncateits scope or ambit. She further submits that in these matters thereare concurrent findings of fact that room charges for any unit ofresidential accommodation was in excess of ₹ 1200 per day perindividual. She submits that the charging section advisably makesno reference to room charges per day or even per occupant. Shesubmits that it is the appellants who seek to read some words in thestatute, which is clearly impermissible, even according to the decisionrelied upon by the Appellants themselves. 16 wp94-02-txas21-10ors dt. 30.08.19 21. Ms. Linhares relies on Federation of Hotel & Restaurant(supra); HPTDC (supra); Syed Hasan Rasul Numa and ors. vs.Union of India and ors.[11]; The Commissioner of Income Tax,Chennai vs. M/s. Breeze Hotels Pvt. Ltd, Chennai[12] and Income-TaxOfficer vs. Mahadeo Lal Tulsian[13] in support of contentions. 22.For all the aforesaid reasons, Ms. Linhares submits that thesubstantial questions of law so framed are required to be answeredagainst the Appellants and in favour of the Revenue, and on thisbasis, the present Appeals are liable to be dismissed. 23. Tax Appeal No.53 of 2007 was admitted by order dated14.8.2007, on the following additional substantial question of law : “ Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in rejecting the claim for exemption under Section 4 of the Expenditure Act, 1987 ? 24.Mr. Naniwadekar relies upon proviso to Section 4(a) of the said Act to contend that nothing in the charging section will apply in case of a hotel referred to in clause (ii) of sub-section (5) of Section 11 1990 2 Scale 1007 12 2012 0 Supreme (Mad) 4143 13 1976 0 Supreme (Cal) 335 17 wp94-02-txas21-10ors dt. 30.08.1980-IA of the Income Tax Act during the period beginning on 1[st] day of April, 1991 and ending on 31[st] day of March, 2001. 23. Tax Appeal No.53 of 2007 was admitted by order dated14.8.2007, on the following additional substantial question of law : “ Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in rejecting the claim for exemption under Section 4 of the Expenditure Act, 1987 ? 24.Mr. Naniwadekar relies upon proviso to Section 4(a) of the said Act to contend that nothing in the charging section will apply in case of a hotel referred to in clause (ii) of sub-section (5) of Section 11 1990 2 Scale 1007 12 2012 0 Supreme (Mad) 4143 13 1976 0 Supreme (Cal) 335 17 wp94-02-txas21-10ors dt. 30.08.1980-IA of the Income Tax Act during the period beginning on 1[st] day of April, 1991 and ending on 31[st] day of March, 2001. 25. Mr. Naniwadekar submits that in Tax Appeals No.53, 54and 55 of 2007, the Appellant is a hotel referred to in clause (ii) ofsub-Section (5) of Section 80-IA and, therefore, was exempted fromthe applicability of the provisions relating to payment or collection ofexpenditure tax under the said Act. He submits that there is nodispute that the Appellant's hotel business is located at a place whichthe Central Government, having regard to the need for developmentof infrastructure for tourism, as specified for the purposes of Section80-IA of the Income Tax Act. He submits that the Appeals concernAssessment Years 1992-93, 1993-94 and 1994-95 and, therefore, arecovered within the period prescribed in the proviso. He submits thateven though the approval as contemplated by Section 80-IA5(ii) ofthe Income Tax Act may have been issued by the prescribed authorityonly on 28.7.1994, relevant to the assessment year 1995-96, that, byitself, does not mean that the Appellant's hotel was not a hotelreferred to in clause (ii) of sub-Section (5) of Section 80-IA of theIncome Tax Act, before the date of such approval. He submits thatthe approval merely recognizes and affirms the position that theAppellant's hotel was indeed a hotel referred to in clause (ii), sub-Section (5) of Section 80-IA of the Income Tax Act. He, therefore, 18 wp94-02-txas21-10ors dt. 30.08.19submits that the contrary view taken by the assessing authorities isimproper and requires reversal. He submits that this is an additionalground in support of the Appellant in Tax Appeals No. 53, 54 and 55of 2007 . 26.Ms. Linhares resists the contentions of Mr. Naniwadekar bypointing out that the Appellant who he represents had expresslyconceded that its case was fully covered by the decision in HPTDC(supra) and further that the Appellant was not entitled to the benefitunder the proviso to Section 4(a) of the said Act for any assessmentyear, prior to 1995-96. She submits that thereafter, rectificationapplications were taken out by the Appellant to contend that therewas no concession. However, the rectification applications wererejected. She, therefore, submits that the Appellants in Tax AppealsNo.53, 54 and 55 of 2007 may not be permitted to raise thecontentions which they now seek to raise in these appeals. 27.In any case, Ms. Linhares submits that the Appellantsobtained the approval, as contemplated by clause (ii), sub-Section (5)of Section 80-IA of the Income Tax Act only on 28.7.1994, relevantto the year 1995-96. Therefore, upon plain reading of the proviso,the Appellants were not entitled to the benefit of exemption prior tothe Assessment Year 1995-96. 19 wp94-02-txas21-10ors dt. 30.08.19 28.For the aforesaid reasons, Ms. Linhares submits that TaxAppeals No.53, 54, and 55 of 2007 are liable to be dismissed. 29. Rival contentions now fall for our determination. 30.In order to appreciate and evaluate the rival contentions, itis necessary to advert to the scheme of the said Act, in the first place. 27.In any case, Ms. Linhares submits that the Appellantsobtained the approval, as contemplated by clause (ii), sub-Section (5)of Section 80-IA of the Income Tax Act only on 28.7.1994, relevantto the year 1995-96. Therefore, upon plain reading of the proviso,the Appellants were not entitled to the benefit of exemption prior tothe Assessment Year 1995-96. 19 wp94-02-txas21-10ors dt. 30.08.19 28.For the aforesaid reasons, Ms. Linhares submits that TaxAppeals No.53, 54, and 55 of 2007 are liable to be dismissed. 29. Rival contentions now fall for our determination. 30.In order to appreciate and evaluate the rival contentions, itis necessary to advert to the scheme of the said Act, in the first place. 31.The said Act was enacted to provide for levy of tax onexpenditure incurred in certain hotels or restaurants and for mattersconnected therewith or incidental thereto. With effect from 1[st]October, 1991, reference to “restaurant” stands deleted. Thechallenge to the constitutional validity of the said Act, both, on theground of legislative competence, as well as the alleged violation ofArticles 14 and 19 (1)(g) of the Constitution of India was repelledby the Constitution Bench of the Hon'ble Supreme Court in the caseof Federation of Hotel & Restaurant Association of India, etc.(supra). 32. The said Act defines the term 'assessee' in Section 2(1) ofthe said Act to mean a person responsible for collecting theexpenditure tax payable under the provisions of the said Act. Thus, it 20 wp94-02-txas21-10ors dt. 30.08.19is clear that the expenditure tax is imposed upon the individual whoincurs expenditure in certain hotels. However, the responsibility ofcollection of this tax from such individual is placed upon the hoteland, therefore, the term 'assessee' has been defined to mean a personresponsible for collection of expenditure tax payable under theprovisions of the said Act. Section 2(6) defines “hotel”, to include abuilding or part of a building where residential accommodation is, byway of business, provided for a monetary consideration. 33.Section 2(8) of the said Act defines expression 'personresponsible for collecting' to mean a person who is required tocollect tax under the said Act or is required to pay any other sum ofmoney under the said Act, and includes every person in respect ofwhom any proceedings under the said Act have been taken, andevery person who is deemed to be an assessee-in-default under anyprovision of the said Act. 34.Section 2(10), defines the expression 'room charges', tomean the charges for an unit of residential accommodation in a hoteland includes the charges for (a) furniture, air-conditioner,refrigerator, radio, music, telephone, television; and (b) such otherservices as are normally included by a hotel in room rent and it doesnot include charges for food, drinks, and any services other than 21 wp94-02-txas21-10ors dt. 30.08.19those referred to in sub-clauses (a) and (b). Expression 'chargeableexpenditure' is defined to mean the expenditure referred to inSection 5 of the said Act. 35.Section 3 of the said Act is most important provision, in sofar as the issues raised in the present Appeal are concerned and thesame reads thus : “3. Application of the Act. This Act shall apply in relation to any chargeableexpenditure-- (1) incurred in a hotel wherein the roomcharges for any unit of residential accommodation at thetime of incurring of such expenditure are [one thousandtwo hundred rupees] or more per day per individual andwhere,-- (a) a composite charge is payable in respect of suchunit and food, the room charges included therein shallbe determined in the prescribed manner; unit and food, the room charges included therein shallbe determined in the prescribed manner; 35.Section 3 of the said Act is most important provision, in sofar as the issues raised in the present Appeal are concerned and thesame reads thus : “3. Application of the Act. This Act shall apply in relation to any chargeableexpenditure-- (1) incurred in a hotel wherein the roomcharges for any unit of residential accommodation at thetime of incurring of such expenditure are [one thousandtwo hundred rupees] or more per day per individual andwhere,-- (a) a composite charge is payable in respect of suchunit and food, the room charges included therein shallbe determined in the prescribed manner; unit and food, the room charges included therein shallbe determined in the prescribed manner; (b) (i) a composite charge is payable in respect of suchunit, food, drinks and other services, or any ofthem, and the case is not covered by theprovisions of sub-clause (a), or unit, food, drinks and other services, or any ofthem, and the case is not covered by theprovisions of sub-clause (a), or (ii) it appears to the Assessing Officer that thecharges for such unit, food, drinks or otherservices are so arranged that the room chargesare understated and the other charges areoverstated,charges for such unit, food, drinks or otherservices are so arranged that the room chargesare understated and the other charges areoverstated, the Assessing Officer shall, for the purposes of thisclause determine the room charges on such reasonablebasis as he may deem fit; and 22 wp94-02-txas21-10ors dt. 30.08.19(2) incurred in a restaurant [before the 1st day of June,1992.” 36.Section 4 of the said Act, is the charging section andprovides that subject to the provisions of the said Act, there shall becharged on and from the commencement of the said Act, a tax atthe rate of 10 per cent of the chargeable expenditure incurred in ahotel referred to in clause (1) of section 3. Proviso to this Sectionprovides that nothing in this clause shall apply in the case of a hotelreferred to in clause (ii) of sub-section (5) of section 80-IA of theIncome-tax Act during the period beginning on the 1st day of April,1991 and ending on the 31st day of March, 2001. 37.Section 5 provides for the meaning of the expression'chargeable expenditure' for the purposes of the said Act. Thissection, amongst other matters, provides that the chargeableexpenditure in relation to a hotel referred to in clause (1) of Section3, means any expenditure incurred in, or payments made to, thehotel in connection with the provision of any accommodation,residential or otherwise; or food or drink by the hotel, whether at thehotel or outside, or by any other person at the hotel; or anyaccommodation in such hotel on hire or lease; or any other servicesat the hotel, either by the hotel or by any other person, by way ofbeauty parlour, health club, swimming pool or other services. 23 wp94-02-txas21-10ors dt. 30.08.19 However, there are some exceptions made as regards the expenditureincurred in foreign exchange, with which we are not concerned. 38.Sections 6 and 24 of the said Act envisages and provides forauthorities to administer the said Act and enforcement of machineryof the said Act for the purposes of implementation of the provisionsof the said Act. 39.Section 7 provides deals with collection and recovery oftax. This section, inter alia, provides that where any chargeableexpenditure is incurred in a restaurant referred to in clause (1) ofsection 3 of the said Act, if the expenditure relates to the servicesspecified in sub-clauses (a) to (d) of clause (1) of Section 5 providedby the hotel, the person who carries on the business of such hotel,the expenditure so collected shall be at the rate specified in clause4(a) of the said Act. 38.Sections 6 and 24 of the said Act envisages and provides forauthorities to administer the said Act and enforcement of machineryof the said Act for the purposes of implementation of the provisionsof the said Act. 39.Section 7 provides deals with collection and recovery oftax. This section, inter alia, provides that where any chargeableexpenditure is incurred in a restaurant referred to in clause (1) ofsection 3 of the said Act, if the expenditure relates to the servicesspecified in sub-clauses (a) to (d) of clause (1) of Section 5 providedby the hotel, the person who carries on the business of such hotel,the expenditure so collected shall be at the rate specified in clause4(a) of the said Act. 40.Section 7(3) of the said Act provides that the tax socollected by the person who carries on the business of the hotel,during any calendar month in accordance with the provisions of sub-section (1) or sub-section (2) shall be paid to the credit of theCentral Government by 10[th] of the month immediately followingthe said calendar month. 24 wp94-02-txas21-10ors dt. 30.08.1941.Section 7(4) of the said Act provides that any personresponsible for collecting the tax, who fails to collect the tax inaccordance with the provisions of sub-section (1) or sub-section (2)shall, notwithstanding such failure, be liable to pay the tax to thecredit of the Central Government in accordance with the provisionsof sub-section (3) of the said Act. 42.Section 8 provides for a person responsible for collectingtax to furnish prescribed return. Section 9 provides for assessment.Section 10 makes a provision for best judgment assessment. Section11 makes a provision for chargeable expenditure escaping assessment.Section 12 makes provision for rectification of mistakes. Section 13provides for time limit for completion of assessment andreassessment. Section 14 relates to interest on delayed payment ofexpenditure tax. Sections 15 to 19 relate to penalties. Section 20relates to notice of demand. Section 21 relates to revision of ordersby the Commissioner. Section 22 relates to appeals to theCommissioner (Appeals). Section 23 provides for appeals toAppellate Tribunal. Section 24 provides for application of provisionsof Income-tax Act to the said Act. Section 25 deals with willfulattempt to evade tax, etc. Section 26 deals with failure to furnishprescribed returns. Section 27 deals with false statement inverification, etc. Section 28 deals with abetment of false return, etc. 25 wp94-02-txas21-10ors dt. 30.08.19 Section 29 provides that certain offences to be non-cognizable.Section 30 provides for institution of proceedings and composition ofoffences. Section 31 confers power upon the Board to make rulesand Section 32 confers power upon the Central Government toremove the difficulties. 43.Thus, the scheme of the Act is that the expenditure tax, isa tax payable by an individual in relation to any chargeableexpenditure incurred by such an individual in a hotel wherein theroom charges for any unit of residential accommodation at the timeof incurring of such expenditure are ₹1200 or more, per day, perindividual. The charge of such expenditure tax shall be at the rate of10 % of the chargeable expenditure in a hotel referred to in Section3(1) of the said Act. Though, the expenditure tax is a tax on anindividual incurring chargeable expenditure as aforesaid, such tax hasto be collected by the hotel or the person carrying on the business ofthe hotel, where such expenditure relates to the services specified inclauses (a) to (d) of sub-Section (1) of Section 5 of the said Act. Ifsuch hotel or the person carrying on business of the hotel, fails tocollect and credit the tax, then notwithstanding such failure, it is thehotel or the person carrying on business of the hotel who shall beliable to pay the tax to the credit of the Central Government. 44.From the scheme, it is absolutely clear that the 44.From the scheme, it is absolutely clear that the 26 wp94-02-txas21-10ors dt. 30.08.19expenditure tax is basically a tax on the individual who incurschargeable expenditure in a hotel specified in Section 3(1) of the saidAct. This is not the tax on the hotel itself, or on the person carryingon business of the hotel. Such hotel or the person carrying onbusiness of the hotel is only made responsible for collection of thetax and crediting of the same to the Central Government. Only incase of failure on the part of the hotel, or the person carrying onbusiness of the hotel to collect and credit such expenditure tax fromthe individual incurring chargeable expenditure at the hotel, does thehotel or the person carrying on business of the hotel, become liable topay such tax to the Central Government. Therefore, the basicpremise necessary to be noted is that the expenditure tax is a tax onthe individual incurring chargeable expenditure and not upon thehotel or the person carrying on the business of the hotel where suchindividual incurs the chargeable expenditure. 45.Now, none of these Appeals have been instituted by anindividual primarily responsible for payment of expenditure tax.These Appeals have been instituted by the hotels or the personscarrying on business of the hotel, because they were responsible forcollection of such expenditure tax from the individuals, and havingfailed to do so, were held liable to pay such tax to the credit of theCentral Government. 27 wp94-02-txas21-10ors dt. 30.08.19 46.The Appellants, i.e. the hotels or the persons carrying onthe business of hotels, contend that the said Act does not apply tothem because the room charges for any unit of residentialaccommodation at their hotels are fixed on 'double occupancy basis'.Therefore, though room charges per se may appear to exceed ₹ 1200per day, having due regard to the expression 'per individual'appearing in Section 3(1) of the said Act, such room charges arerequired to be 'divided into two'. Upon such division, they contendthat the room charges do not exceed ₹ 1200 and, therefore, the saidAct does not apply to them. The Appellants contend that any otherinterpretation will render the expression 'per individual' appearing inSection 3(1) of the said Act, redundant or otiose. They contend thatsince this is impermissible, the interpretation proposed by them,deserves acceptance. 47.The aforesaid contention on behalf of the Appellants willhave to be examined by keeping in mind the basic premise that theexpenditure tax, is a tax on an individual who incurs chargeableexpenditure in a specified hotel. This is not a tax on the hotel itselfor on the person carrying on carrying on the business of the hotel.So construed, it is clear that Section 3(1) of the said Act is, notstrictly speaking the charging section. In fact, in case of Federationof Hotel & Restaurant Association of India, etc. (supra), the Hon'be 28 wp94-02-txas21-10ors dt. 30.08.19Supreme Court has referred to Section 4 of the said Act, as thecharging section. 48.The scheme of the said Act is also very clear in the sensethat the incidence of tax is on the persons who incur the chargeableexpenditure in the class of hotel to which the act applies. The hotelsor the persons who carry on business of the hotel, are only chargedwith the responsibility of collection of this expenditure tax. It is onlyin case of failure to collect, that the hotel or the person carrying onbusiness of the hotel, are made liable to pay such tax to the credit ofthe Central Government. Therefore, the contentions raised by theAppellants will have to be evaluated by keeping in mind this basicscheme and this basic postulates in relation to the said Act. 28 wp94-02-txas21-10ors dt. 30.08.19Supreme Court has referred to Section 4 of the said Act, as thecharging section. 48.The scheme of the said Act is also very clear in the sensethat the incidence of tax is on the persons who incur the chargeableexpenditure in the class of hotel to which the act applies. The hotelsor the persons who carry on business of the hotel, are only chargedwith the responsibility of collection of this expenditure tax. It is onlyin case of failure to collect, that the hotel or the person carrying onbusiness of the hotel, are made liable to pay such tax to the credit ofthe Central Government. Therefore, the contentions raised by theAppellants will have to be evaluated by keeping in mind this basicscheme and this basic postulates in relation to the said Act. 49.The analysis of Section 3(1) of the said Act indicates thatthis provision relates to the applicability of the said Act. In itsopening portion, this section states that it shall apply 'in relation toany chargeable expenditure'. This means that Section 3(1), at least inits opening part, does not make reference to the application of thesaid Act to any hotel as such, but rather it refers to application inrelation to 'any chargeable expenditure'. This is in consonance withthe basic scheme of the said Act that the expenditure tax is not a taxon any hotel or on any person carrying on business of the hotel, butrather the expenditure tax is a tax on chargeable expenditure incurred 29 wp94-02-txas21-10ors dt. 30.08.19by an individual at the hotel specified in Section 3(1) of the said Act. 50.Further, Section 3(1) of the said Act proceeds to state thatthe said Act shall apply in relation to any chargeable expenditureincurred in a hotel wherein the 'room charges' for 'any unit ofresidential accommodation' at the time of incurring of suchexpenditure are ₹ 1200 or more 'per day' 'per individual'. Rest of thesection deals with determination of room charges where compositecharges are payable in respect of such unit meaning unit ofresidential accommodation and food. With this later part of thesection we are presently not concerned in these Appeals. 51.Now, it is correctly the case of the Appellants that each ofthe expressions, which will include the above referred italicizedexpressions in Section 3(1) of the said Act have to be given somemeaning and cannot be ignored while considering the scope andimport of the section. Even the Respondents do not and perhapscannot dispute this proposition. 52.The expression “room charges” in Section 3(1) of the saidAct poses no difficulty in interpreting, because such expression isdefined in Section 2(1) of the said Act. Significantly, this definitionrefers to charges for 'a unit of residential accommodation in a hotel'and then proceeds to state that it includes the charges for furniture, 30 wp94-02-txas21-10ors dt. 30.08.19air-conditioner, refrigerator, radio, music, telephone, television andsuch other services as are normally included by a hotel in room rent.,but does not include charges for food, drinks and any services otherthan those referred to in sub-clauses (a) and (b). 52.The expression “room charges” in Section 3(1) of the saidAct poses no difficulty in interpreting, because such expression isdefined in Section 2(1) of the said Act. Significantly, this definitionrefers to charges for 'a unit of residential accommodation in a hotel'and then proceeds to state that it includes the charges for furniture, 30 wp94-02-txas21-10ors dt. 30.08.19air-conditioner, refrigerator, radio, music, telephone, television andsuch other services as are normally included by a hotel in room rent.,but does not include charges for food, drinks and any services otherthan those referred to in sub-clauses (a) and (b). 53.At least, from the clear and exhaustive definition of theexpression 'room charges' in Section 2(10) of the said Act, there is noscope to introduce concepts like 'double occupancy' or 'tripleoccupancy' or 'quad occupancy'. The