TMI Blog2002 (6) TMI 589X X X X Extracts X X X X X X X X Extracts X X X X ..... f room charges are not in the nature of rent and, thus, outside the scope of section 194-I of the Income-tax Act, consequently issue a writ of mandamus directing the respondents 1 and 2 to issue order/instructions and directions, clarifying the non-applicability of the provisions of section 194-I of the Income-tax Act to the amounts 1st petitioner herein receives in its Hotel business and pass such other order or orders as this Hon ble Court deems fit and proper in the interest of justice and pass such other order or orders as this Hon ble Court deems fit and proper in the circumstances of the case. 2. Along with WPMP No. 13783 of 1996, the petitioners had also filed WPMP No. 13782 of 1996 to implead Indian Airlines Ltd. Begumpet, Hyderabad and Asian Paints India Ltd. Goregaon (West), Bombay, as party-respondents to the writ petition. That WPMP was also ordered by this Court on 7-10-1996. Accordingly, they are added as parties - respondents 4 and 5, respectively, to the writ petition. 3. The facts leading to filing of the writ petition as set out in the writ affidavit be summarised as follows : The 1st petitioner is engaged in hospitality business and is running a five-star ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4-I to the hotel industry. The request made to the 2nd respondent is pending consideration and in the meanwhile the customers of the petitioner continued to deduct the TDS and on account of this the petitioner would not be able to carry their business. In the above circumstances, the petitioners have filed the writ petition seeking the relief already noticed. 4. The Deputy Commissioner (Assts.) Circle V., Hyderabad, the 3rd respondent in the writ petition, has filed counter affidavit opposing the writ petition. That counter affidavit is adopted by the CBDT, New Delhi, the 2nd respondent in the writ petition by filing a memo dated 27-6-2001. The Union of India, Ministry of Finance and Commerce, the 1st respondent in the writ petition has not filed any counter affidavit. In the counter affidavit filed by the 3rd respondent and adopted by the 2nd respondent, the material averments are as follows : The rent, as defined under the provisions of section 194-I means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or any building. As such, the agreement or arrangement under which the petitioner provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of running of a hotel is assessable under the head Income arising out of business and not under the head Income from house property . The 1st petitioner-hotel division, was all along assessed under the head business income . According to the learned counsel section 194-I would be attracted only when land and building is given on lease, sub-lease, tenancy or any other agreement or arrangement for the exclusive use of the lessees; thus, creating a right though in a limited sense, in the nature of property right under the provisions of the Transfer of Property Act or other enactments governing tenancy rights. In contrast, according to the learned counsel in the case of hotels, the customer is allowed to use the room and other facilities for certain time subject to various restrictions and, therefore, no right as such is created in the property of the hotel in favour of the customer. The customer, thus, uses the premises and enjoys the facilities in the hotel as a licensee, not as a lessee or a tenant. Shri C. Kodandaram contended that in the guise of deduction of TDS under section 194-I, many of the corporate customers of the 1st petitioner are withholding huge amounts to the ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amily; and (b)twenty per cent in other cases; Provided that no deduction shall be made under this section where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the aforesaid person to the account of, or to, the payee, does not exceed one hundred and twenty thousand rupees. Explanation.-For the purpose of this section (i ) rent means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or any building (including factory building), together with furniture, fittings and the land appurtenant thereto, whether or not such building is owned by the payees; (ii)where any income is credited to any account, whether called Suspense account or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. 8. Section 194-I was inserted by the Finance Act, 1994 with effect from 1-6-1994. The scope and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IR 1965 Pat. 446 (DB) and Chandi Prasad v. Rameshwar Prasad Agarwal AIR 1967 Pat. 41 has held that the word any excludes limitation or qualification . In State of Kerala v. Shaju [1985] Ker. LJ 33 the Court held that the word any is expressive. It indicates in the context one or another or one or more , all or every , in the given category ; it has no reference to any particular or definite individual, but to a positive but undetermined number in that category without restriction or limitation of choice. Thus, having regard to the context in which the expressions any payment and any other agreement or arrangement occurring in the definition of the term rent (have been used) it only means each and every payment (that has been) made to the petitioner-hotel under each and every agreement or arrangement with the customers for the use and occupation of the hotel rooms. 10. The crux of the argument of Shri Kodandaram is that a customer in the hotel is not the lessee or a tenant, but a licensee and, therefore, the consideration paid by him to the management of the hotel for accommodation and facilities provided to him in the hotel room cannot be regarded as rent withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, the respondent was not a tenant but only a licensee. By order dated 24-10-1950, the Rent Controller held that the exemption under section 2 is related only to residential rooms in a hotel and, therefore, the Act applied to the premises in question. On appeal the District Judge, Delhi, came to a contrary conclusion; he was of the view that the rooms in question were rooms in a hotel within the meaning of section 2 and, therefore, the Act had no application to the case. Further, on a construction of the said document, he held that the appellants only permitted the respondent to use the said two rooms in the hotel, and, therefore, the transaction between the parties was not a lease but a licence. On the basis of the aforesaid two findings, he came to the conclusion that the Rent Controller had no jurisdiction to fix a fair rent for the premises. The respondent preferred a revision against the said order of the District Judge to the High Court of Punjab at Simla, and Khosla, J held that the said premises were not rooms in a hotel within the meaning of section 2 and that the document executed between the parties created a lease and not a licence. On those findings, he set aside the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AIR 1974 SC 396, Board of Revenue v. A.M. Ansari AIR 1976 SC 1813, Dipak Banerjee v. Smt. Lilabati Chakroborty AIR 1987 SC 2055, Khalil Ahmed Bashir Ahmed v. Tufelhussein Samasbhai Saranpurwala AIR 1988 SC 184 and M.N. Clubwala s case (supra) held : This exclusive possession itself is not decisive in favour of a lease and against a mere licence, for even the grant of exclusive possession might turn out to be only a licence and not a lease where the grantor himself has no power to grant the lease. In the last analysis the question whether a transaction is a lease or a licence turns on the operative intention of the parties and that there is no single, simple litmus-test to distinguish one from the other. The solution that would seem to have been found is, as one would except, that it must depend on the intention of the parties. 14. The above ratio has no bearing on the decision-making in the present case and it would not help in considering the definition of rent as defined under the Explanation to section 194-I. In British India Corpn. s case (supra) the Supreme Court dealing with the question whether the payment received from the employees of the British India Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration paid to the 1st petitioner by its customers under the agreements for the use and occupation of the hotel rooms squarely falls within the term rent as defined under the Explanation . 15. The decision of the Apex Court in Anand Theatres case (supra) also is of no help to the petitioner. That case involved the question whether a building which was used as a hotel or cinema theatre could be considered to be a plant or whether it remained a building for the purposes of depreciation under section 32. The Court held that the business of a hotelier is carried on in a building or premises, but the building is not an apparatus for running such business. The Court also held that the same would be the position with regard to a theatre in which cinema business is carried on. Moreover, such buildings cannot be termed as tools for running business but they are merely shelters for carrying on such business activities. So opining, the Court held that building used as hotel or cinema theatre is nonetheless a building and not a plant for the purpose of allowing depreciation under section 32. 16. The judgment of the Calcutta High Court in Darjeeling Club Ltd. s case (supra) cited b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... word rent and such an interpretation cannot be placed. A Constitution Bench of the Supreme Court in Sri Ram Ram Narain v. State of Bombay AIR 1959 SC 459 held : . . . If the language of the enactment is clear and unambiguous it would not be legitimate for the Courts to add any words thereto and evolve therefrom some sense which may be said to carry out the supposed intentions of the Legislature. The intention of the Legislature is to be gathered only from the words used by it and no such liberties can be taken by the Courts for effectuating a supposed intention of the Legislature. . . . It is well-recognised principle governing interpretation of the statute that only if there is ambiguity in the terms of the provisions, recourse must naturally be had to well-established principles of construction, but it is not at all permissible for the Court first to create an artificial ambiguity and then try to resolve the ambiguity by resort to some general principle. That is exactly what the learned counsel for the petitioner attempted in the present case. In opining as above, we derived support from the judgment of the Supreme Court CIT v. Indian Bank Ltd. AIR 1965 SC 1473. In Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lord to sue his tenant without having to obtain the previous permission of the District Magistrate. The construction of clause (c) placed by the High Court is, therefore, not correct. (p. 645) 19. The contention of Shri Kodandaram that if the stand of the department is upheld, it would have deleterious effect on the finance of the 1st petitioner-company and it would violate the fundamental right of the 1st petitioner guaranteed under article 19(1)(g) is untenable. Before considering this contention, it needs to be noticed that the constitutionality of the provisions of section 194-I is not questioned in this case. Therefore, for the purpose of deciding the present writ petition, the provisions of section 194-I should be regarded as constitutionally valid. The only thing that arises in this case is the interpretation of the provisions of section 194-I, particularly the definition of rent in the Explanation to the said section. It is well-settled by the decisions in Himmatlal Harilal Mehta v. State of M.P. AIR 1954 SC 403, Nazeria Motor Service v. State of A.P. AIR 1970 SC 1864, Madar Saheb Shaik v. State of A.P. AIR 1970 SC 1804, Kodar v. State of Kerala AIR 1974 SC 2272, Prag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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