Commissioner of Income Tax vs Adyar Gate Hotel Ltd.

P.D. Dinakaran J.

The above tax case appeal is directed against the 1 order of the Income Tax Appellate Tribunal dated 13-1-2006, made in I. T. A. No. 1519/Mds/2002 for the assessment year 1993-94 and the following substantial question of law has been raised for consideration:

Whether, on the facts and circumstances of the case, the Tribunal was right in holding that expenditure-tax, luxury tax and sales tax should not be included in the total business receipts of the assessee for the purpose of computation of deduction u/s 80HHD ?

The assessing officer, for the assessment year 1993-94, included expenditure-tax, luxury tax and sales tax in the business receipts for the purpose of computation of deduction u/s 80HHD of the Income -tax Act, 1961 (hereinafter referred to as "the Act"), on the ground that since the liability to pay these taxes arose on account of the assessee carrying on the business, the receipts would form part of the total turnover. On appeal by the assessee, the Commissioner (Appeals) confirmed the order of the assessing officer. On further appeal by the assessee, the Appellate Tribunal, held that expenditure-tax, luxury tax and sales tax should not be included in the total business receipts of the assessee. Hence, the present appeal by the revenue raising the question of law referred to above.

It is brought to our notice by learned senior counsel appearing for the assessee, which is not disputed by counsel appearing for the revenue , that the issue raised in the question is covered against the revenue in the unreported decision of this Court in the assessee''s own case in T. C. No. 233 of 2006 dated 23-2-2006since reported in Commissioner of Income Tax Vs. Adyar Gate Hotel Ltd., , wherein this Court, after considering the decision of this Court in The Commissioner of Income Tax, Tamilnadu-I, Madras Vs. Wheels India Limited, and the decision of the Bombay High Court in Commissioner of Income Tax Vs. Sudarshan Chemicals Industries Ltd., Rathi Engineering Works and Klockner Windsor (I) Ltd., , held the issue in favour of the assessee.

It is seen that in the above two cases, viz., The Commissioner of Income Tax, Tamilnadu-I, Madras Vs. Wheels India Limited, and Commissioner of Income Tax Vs. Sudarshan Chemicals Industries Ltd., Rathi Engineering Works and Klockner Windsor (I) Ltd., , the courts considered Section 80HHC of the Act relating to deduction in respect of profits retained for export business and held that sales tax and excise duty are not to be included in the total turnover while computing the deduction u/s 80HHC of the Act.

This Court in the assessee''s own case in T. C. No. 233 of 2006 dated 23-2-2006 Commissioner of Income Tax Vs. Adyar Gate Hotel Ltd., , while considering Section 80HHD of the Act relating to deduction in respect of earnings in convertible foreign exchange, applied the above ratio and held that expenditure-tax, luxury tax and sales tax should not be included in the total business receipts for the purpose of computation of deduction u/s 80HHD of the Act.

Following the ratio laid down by this Court in the assessee''s own case in T. C. No. 233 of 2006 dated 23-2-2006 Commissioner of Income Tax Vs. Adyar Gate Hotel Ltd., , we hold that the Appellate Tribunal was right in holding that expenditure-tax, luxury tax and sales tax should not be included in the total business receipts of the assessee for the purpose of computation of deduction u/s 80HHD of the Act.

Accordingly, we do not find any question of law, much less a substantial question of law that arises out of the order of the Appellate Tribunal and the tax case appeal stands dismissed. No costs.