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2017 (1) TMI 1014 - RAJASTHAN HIGH COURT

2017 (1) TMI 1014 - RAJASTHAN HIGH COURT - TMI - Assessment u/s 17(10), 21(5) and 20 of the Luxury Tax Act - Under assessment of tax - renting of “lawn” - escapement of tax on lawn on account of non-disclosure - assessee contended that no tax is leviable for renting of the lawn because the lawn is separate, it has separate access and merely because there is one profit and loss account or a separate receipt has been issued of renting of the lawn, there is no reason to levy luxury tax when renting .....

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dential accommodation along with “lawns”, therefore, once a lawn having been prescribed as a part of the hotel, the assessee was certainly liable to pay Luxury Tax on giving lawns on hire to the various persons for marriage and for diverse other purposes. - The definitions of “business”, “luxuries provided in the hotel” and “turnover”, even prior to the amending Act of 2007 which is under consideration, in my view envisages and make it amply clear that lawns are included in the Explanation ( .....

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iew, the Tax Board is unjustified in holding that receipts by way of renting of “lawn” could not be covered prior to 9.3.2007. The Tax Board has not even adverted to the various sub-clauses of sec. 2 as referred to hereinbefore, and without adverting to the plain and simple meaning, has held that the liability of assessee is only after 9.3.2007, which in my view is wholly perverse. - The amendment which has been brought into force from 9.3.2007 as given hereinabove, only covers such owners o .....

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t is unaffected by the luxury as admittedly the room rent is exceeding ₹ 1000/- or more even prior to 9.3.2007. Thus, in my view, the finding of taxability of renting of “lawn” by the assessee is found in order. Consequently, levy of interest is also upheld, being automatic and goes with the levy of tax. - Imposition of penalty - Held that: - it is not a case of imposition of penalty as material was available before the AO even during the course of the return originally having been sub .....

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erence No. 118, 119, 120, 121 / 2014 - Dated:- 13-1-2017 - Jainendra Kumar Ranka, J. For the Petitioners : Mr. R.B. Mathur with Ms. Tanvi Sahai and Ms. Meenal Ghiya For the Respondents : Mr. K.K. Sharma, Sr. Counsel, with Mr. Rishabh Khandelwal Mr. Sarvesh Jain JUDGMENT 1. All these petitions at the instance of the Revenue are directed against common order dt 5.10.2009 passed by the Rajasthan Tax Board, Ajmer, whereby appeals of the respondent has been allowed. It relates to assessment years 200 .....

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y conducted and on perusal of the profit and loss account and other details gathered it was noticed that the assessee is receiving income by way of rental of the rooms occupied by the persons staying in hotel and in addition to that the assessee had also received certain amounts during the assessment years on account of renting/leasing out of lawn for the purposes of marriage parties and for other occasions. It was found by the Assessing Officer that there was an under assessment as the assessee .....

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us, framed an assessment u/s 17(10), 21(5) and 20 of the Act by not only levying tax but interest as well as levied penalty. 3. The assessee preferred appeals before the Dy. Commissioner (Appeals) before whom the assessee contended that no tax is leviable for renting of the lawn because the lawn is separate, it has separate access and merely because there is one profit and loss account or a separate receipt has been issued of renting of the lawn, there is no reason to levy luxury tax when rentin .....

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hin the provisions of the Act as fresh material came to the knowledge of the AO and thus upheld the reopening of the assessment. 4. The assessee preferred an appeal before the Tax Board, who by a common order, however, upheld the reopening of the assessment but was satisfied that the renting of lawn and receiving of certain amount, is not applicable in the facts of the case and held that an amendment was brought on 9.3.2007 and the same may be applicable after 9.3.2007 but not prior to 9.3.2007 .....

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become final. The learned counsel contended that the Tax Board was unjustified in holding that there was vast difference before 9.3.2007 and after 9.3.2007 and drew attention of the court analysing both the provisions prior and later and contended that even prior to 9.3.2007 the definitions of 'business', 'hotel', and 'luxuries provided by the hotel' are quite clear and admittedly the respondent is a luxury hotel. Learned counsel contended that the definition of business .....

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open lands which were being let/leased out for the purposes of marriage, functions or otherwise were taken into tax net and did not affect the case of assessee because admittedly it is a luxury hotel, charging more than ₹ 1000/- per day and the reasoning reached by the AO as well as the DC(A) is well reasoned and thus supported the order of both the authorities below. Learned counsel also contended that not only interest is leviable but even penalty was just and proper as the assessee had .....

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td. v. Annapurna Construction (2008) 6 SCC 732, Pandey & Co. Builders Pvt. Ltd. v. State of Bihar & Another (2007) 1 SCC 467, Commissioner of Income Tax, Gujarat v. Vadilal Lallubhai AIR 1973 SC 1016, Raymond Woollen Mills Ltd. v. Income Tax Officer & Others [1999] 236 ITR 34 (SC), Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. [2007] 291 ITR 500 (SC), Honda Siel Power Products Ltd. v. DCIT & Another (2012) 12 SCC 762, Rajasthan Felts Manufacturing .....

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ccount of change of opinion, a closed assessment cannot be reopened. Learned counsel contended that since assessee succeeded before the Tax Board on merits, therefore, there was no occasion for the assessee respondent to have challenged the reopening of the assessment and the assessee can always defend its case even in the petition preferred by the Revenue. Learned counsel also contended that u/O.41 R.22 CPC the respondent or the assessee gets a right to object in the proceedings preferred by th .....

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d which is basically for the persons who come and stay and the lawn under dispute is entirely different, has a separate access and there is no inter connection or connectivity with hotel and persons who takes lawn separately, do not enter the hotel premises or otherwise. Learned counsel also drew analogy of the pre-amended and post-amended positions and contended that after 9.3.2007 covering of the lawn or open lands were enlarged by the Act and, therefore, these proceedings being prior to 9.3.2 .....

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udgments :- Cooperative Company Ltd. v. Commissioner of Trade Tax, U.P. (2007) 4 SCC 480, Virtual Soft Systems Ltd. v. CIT, Delhi-I (2007) 9 SCC 665, State of Uttar Pradesh & Others v. Aryaverth Chawl Udyoug & Others 2014 SCC OnLine SC 1205, Commissioner of Central Excise, Jaipur v. Shree Rajasthan Syntex Limited & Others (2015) 14 SCC 626, Black Stone Rubber Industries Pvt. Ltd. v. State of Rajasthan & Others RLW 2001 (3) Raj. 1486, CTO, Special Circle A , Jodhpur v. Prathvi Sin .....

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eopening of the assessment is concerned, learned counsel for the petitioner contended that the substantial question admitted by this court is on merits only, and the assessee respondent had every right to challenge by way of filing a separate petition even challenging the finding of reopening as all the three authorities have upheld the reopening of the assessment. Learned counsel further contended that strictly speaking, provisions of Civil Procedure Code are not applicable in the proceedings u .....

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y of filing a cross-objection later, now to raise this plea is unjust and cannot raise this issue for the first time before this court when the matter is being heard finally and admittedly this court can only answer the question admitted by this court. 9. I have heard learned counsel for the parties and have perused the material on record including the judgments cited. 10. This court had admitted the petitions on the following question of law :- (i) whether in the facts and circumstances of the .....

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w.e.f. 9.3.2007 without appreciating that the tax was leviable even prior to that date. (iii) Whether in the facts and circumstances of the case, the Rajasthan Tax Board was justified in deleting the tax, interest and penalty without appreciating the provision of the Act including definition of luxuries as contemplated u/s 2(i) of the Act. 11. Insofar as reopening of the assessment is concerned, all the three authorities have come to a concurrent finding that the AO was justified in issuing noti .....

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sessee had a right to file, within a period of one month once the petitions were admitted on questions of law. In my view raising of an issue by the learned counsel for respondent, at this juncture cannot be considered. Learned counsel for the respondent has contended that though the assessee had succeeded on merits, therefore, it may not have filed cross-appeal only against a finding recorded by the authorities and may not have even preferred a cross-objection but gets right to defend when the .....

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the respondents, thus I refrain to discuss or consider the arguments or judgments relied upon by the learned counsel for respondent that the AO was precluded from reopening of the assessment as it was on account of a change of opinion or had no jurisdiction. The scope of revision petition being limited, the court is required to answer on the substantial questions of law raised and admitted. 13. It would be appropriate to quote the provisions as it existed and which has been taken note of by all .....

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ess includes the activity of providing residential accommodation and any other service in connection with, or ancillary to, such activity of providing residential accommodation, by a hotelier for monetary consideration, whether or not such activity of providing residential accommodation is carried on with motive to make gain or profit and business includes the activity of providing residential accommodation or any place for the purpose of organizing parties, ceremonies or functions and any other .....

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ed by way of business; hotel includes a residential accommodation along with the lawns therefore, a lodging house, an inn, a public house or a building or part of a building or any place, where a residential accommodation or a space for the purpose of organizing parties, ceremonies or functions is provided by way of business; (i) Luxuries provided in a hotel means accommodation such as room or other place or lawn etc., by whatever name called and other services including air-conditioning, cooler .....

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14. Admittedly in the instant case, tariff of the room rent is more than ₹ 1000/-, wherein rate of 8% was payable by way of Luxury Tax. On perusal of the plain and simple definition quoted hereinabove, in my view, the assessee was liable to pay the Luxury Tax for providing the lawns separately to the persons who may have taken for organising wedding functions/reception, other parties etc. as business defined in the Act is wide enough to cover giving/renting of lawns by a luxury hotel like .....

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there is no co-relation with the same, however, in my view it does not make any difference as long as the lawns are in the ownership of hotel and it is also admitted fact that the lawn is integral part of the hotel. Argument of the learned counsel for respondent that lawn is separate and has separate access and there is no connection or co-relation or interference in between the hotel as such and the lawns and that there is a separate lawn for the occupants residing in the hotel, in my view it a .....

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he hotel, the assessee was certainly liable to pay Luxury Tax on giving lawns on hire to the various persons for marriage and for diverse other purposes. 15. On perusal of sub-clause (i) supra, which provides luxuries provided in the hotel , includes accommodation such as room or other place or lawn etc., by whatever name called and other services, in my view should also cover the case of assessee in the same footing, and what should be a luxury, is that the room charges in the hotel is per day .....

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the sub-clauses in sec. 2, is wide enough to cover the case of assessee to be falling under luxury provided in a hotel. The definitions as given above of business , luxuries provided in the hotel and turnover , even prior to the amending Act of 2007 which is under consideration, in my view envisages and make it amply clear that lawns are included in the Explanation (ii) of sec.2(1)(i) for the purposes of levy of Luxury Tax in a hotel, therefore, lawn being part of hotel or even rooms, it should .....

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rd has not even adverted to the various sub-clauses of sec. 2 as referred to hereinbefore, and without adverting to the plain and simple meaning, has held that the liability of assessee is only after 9.3.2007, which in my view is wholly perverse. 17. In my view, the amendment which has been brought into force from 9.3.2007 as given hereinabove, only covers such owners or other entities other than even hotels who have developed lawns and is renting / giving on hire such lawns for organising parti .....

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