COMMISSIONER OF INCOME-TAX vs. EXPRESS HOTEL (P) LTD

ITR/246/1993HC GujaratGJHC24021277199315 September 2005Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI3 pages
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What were the facts?

The Commissioner of Income-Tax referred a question of law to the High Court of Gujarat concerning assessment years 1978-79 to 1982-83. The dispute involved the deletion of an addition made by the Income Tax Officer (ITO) on account of business receipts under the head "Luxury Tax". The assessee, Express Hotel (P) Ltd., had disputed this liability in the courts of law. The High Court noted that the Income Tax Appellate Tribunal had followed its own prior order for assessment year 1983-84 in the assessee's own case. In that prior judgment, the Tribunal was held justified in directing the Assessing Officer to allow the deduction of the statutory liability of luxury tax collected by the assessee.

What did the High Court hold?

The High Court held that the Income Tax Appellate Tribunal was justified in law in directing the Assessing Officer to allow the deduction of the statutory liability of luxury tax collected by the assessee. The Court applied the ratio of its own earlier judgment in the assessee's own case for assessment year 1983-84. The principle established is that statutory liabilities collected by an assessee, even if disputed, are deductible when the Tribunal has found justification for such deletion. The question referred is answered in the affirmative, in favour of the assessee and against the revenue. The reference stands disposed of accordingly.

What were the issues?

1. Whether the appellate Tribunal is right in law and in facts in deleting the addition made by the ITO on account of the business receipt of the assessee under the head “Luxury Tax” regardless of the fact that such a liability had been disputed by the assessee in the courts of law? (Question of law and fact, concerning the deductibility of luxury tax). Assessee's Contention: Not explicitly recorded, but impliedly the assessee supported the deletion of the addition by the Tribunal. Revenue's Contention: Not explicitly recorded, but the reference itself indicates the revenue challenged the Tribunal's deletion of the addition made by the ITO.

Which sections of the Income-tax Act were involved?

Section 256(1)

AI-generated summary — verify with the full judgment below

ITR/246/1993 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No. 246 of 1993 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA HONOURABLE MS.JUSTICE H.N.DEVANI ============================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ============================================================== COMMISSIONER OF INCOME-TAX - Applicant(s)

Versus EXPRESS HOTEL (P) LTD - Respondent(s) ============================================================== Appearance : MR MANISH R BHATT for Applicant(s) : 1, MR RAMKRISHNA B DAVE for Respondent(s) : 1, ================================================================== CORAM :  HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 15/09/2005 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA) 1.The fo

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