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TMI Blog2002 (6) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... its customers on account of 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 respondents Nos. 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 the first petitioner herein receives in its hotel business and pass such other order or orders as this court deems fit and proper in the interest of justice and pass such other order or orders as this court deems fit and proper in the circumstances of the case." Along with WPMP No. 13783 of 1996, the petitioners had also filed WPMP No. 13782 of 1996 to implead Indian Airlines Limited, Begumpet, Hyderabad, and Asian Paints India Limited, Goregaon (West), Bombay, as party respondents to the writ petition. That WPMP was also ordered by this court on October 7, 1996. Accordingly, they are added as parties--respondents Nos. 4 and 5, respectively, to the writ petition. The facts leading to the filing of the writ petition as set out in the writ affidavit be summarised as follows: The first petitioner is engaged in hospitality busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he second respondent herein, constituted under section 116 of the Act to issue circular/clarification with regard to the applicability of section 194-I of the Act to the hotel industry. The requests made to the second respondent are 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 on their business. In the above circumstances, the petitioners have filed the writ petition seeking the relief already noticed. The Deputy Commissioner of Income-tax (Assts.), Circle V, Hyderabad, the third respondent in the writ petition, has filed counter affidavit opposing the writ petition. That counter affidavit is adopted by the Central Board of Direct Taxes, New Delhi, the second respondent in the writ petition by filing a memo dated June 27, 2001. The Union of India, Ministry of Finance and Commerce, the first respondent in the writ petition, has not filed any counter affidavit. In the counter affidavit filed by the third respondent and adopted by the second respondent, the material averments are as follows: The rent, as defined under the provisions of section 194-I means any pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be assessable under the head "Income from house property" falling within the scope of section 14C read with sections 22 to 27 of the Act and not falling under section 2(13), section 14D of the Act. Learned counsel contended that the income arising out 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 first petitioner-hotel division, was all along assessed under the head "Business income". According to 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 learned counsel, in the case of hotels, the customer is allowed to use the room and other facilities for a 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of-- (a) fifteen per cent. if the payee is an individual or a Hindu undivided family; 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 purposes 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 payee; (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 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a wider sense extending from "one to all". In G. Narsingh Das Agarwal v. Union of India [1967] 1 MLJ 197, the court opined that the word "any" means "all" except where such a wide construction is limited by the subject matter and context of the statute. The Patna High Court in Ashiq Hasan Khan v. Sub-Divisional Officer, AIR 1965 Patna 446 and Chandi Prasad v. Rameshwar Prasad Agarwal, AIR 1967 Patna 41, has held that the word "any" excludes "limitation or qualification". In State of Kerala v. Shaju [1985] Ker LT 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" occur in the definition of the term "rent", it only means each and every payment made to the petitioner-hotel under each and every agreement or arrangement with the customers for the use and occupation of the hotel rooms. The crux of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed under the Delhi and Ajmer-Merwara Rent Control Act, 1947. The appellants appeared before the Rent Controller and contended that the Act had no application to the premises in question as they were premises in a hotel exempted under section 2 of the Act from its operation, and also on the ground that under the aforesaid document, the respondent was not a tenant but only a licensee. By order dated October 24, 1950, the Rent Controller held that the exemption under section 2 of the Act 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 of the Act 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 license. 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roversy whether the transaction in question could be said to be a lease or a license and speaking through M.N. Venkatachaliah J. on consideration of the decisions in Wood v. Leadbitter [1845] 153 ER 351; Glenwood Lumber Co. Ltd. v. Phillips [1904] AC 405 (PC); Cobb v. Lane [1952] 1 All ER 1199 (CA); Marchant v. Charters [1977] 3 All ER 918 (CA); R.N. Kapur's case AIR 1959 SC 1262; B.M. Lall v. Dunlop Rubber Co. (India) Ltd., AIR 1968 SC 175; [1968] 1 SCR 23; Qudrat Ullah v. Municipal Board, Barielly, AIR 1974 SC 396; [1974] 1 SCC 202; Board of Revenue v. A.M. Ansari [1976] 38 STC 577; AIR 1976 SC 1813; [1976] 3 SCR 661; Dipak Banerjee v. Smt. Lilabati Chakraborty, AIR 1987 SC 2055; [1987] 4 JT 454; Khalil Ahmed Bashir Ahmed v. Tufelhussein Samasbhai Sarangpurwala, AIR 1988 SC 184; [1987] 5 JT 342 and Mrs. M.N. Clubwala v. Fida Hussain Saheb, AIR 1965 SC 610: "Thus 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 granter himself has no power to grant the lease. In the last analysis the question whether a transaction is a lease or a li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny other agreement or arrangement for the use of building or land. If that is so, even accepting the contention of Sri Kodandaram, that the relationship between the first petitioner and its corporate customers is a kind of licence-arrangement and not a leasing-arrangement as correct, the payment made by such licensees could validly be treated as "rent" within the meaning of that term for the purpose of section 194-I. There is no controversy that the payments have to be made by the corporate customers of the first petitioner under agreements entered into between them and for the use of the building owned by the first petitioner. Therefore, the consideration paid to the first 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. The decision of the apex court in CIT v. Anand Theatres [2000] 244 ITR 192, 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 of the Act. The court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (including bed-tea) is charged at Rs.825, whereas Rs.100 is separately fixed for breakfast. That clearly indicates that the rent charged by the hotel for rooms does not include charges for all other facilities and services provided by the hotel management. Having regard to the well-settled principles governing interpretation/construction of statutes also, the interpretation suggested by Sri Kodandaram on the definition of the "rent" as defined under the Explanation to section 194-I cannot be accepted. If the court were to exclude the payments made by the licensees under an agreement or an arrangement for the use of land or build ing, that would be tantamount to modifying the definition of the word "rent" and such an interpretation cannot be placed. A Constitution Bench of the Supreme Court in Sri Ram Ram Narain Medhi 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rued as meaning 'and' it would mean that the construction should not only be such as materially alters the accommodation but is also such that it would substantially diminish its value. Such an interpretation is not warranted for the simple reason that there may conceivably be material alterations which do not, however, diminish the value of the accommodation and on the other hand there may equally conceivably be alterations which are not material alterations but nevertheless would substantially diminish the value of the premises. It seems to us that the Legislature intended to provide for both the contingencies and where one or the other exists it was intended to furnish a ground to the landlord 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." The contention of Sri Kodandaram that if the stand of the Department is upheld, it would have a deleterious effect on the finance of the first petitioner company and it would violate the fundamental right of the first petitioner guaranteed under article 19(1)(g) of the Constitution of India is untenable. Before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evailing conditions at the time, enter into judicial verdict." Therefore, even accepting that the obligation to effect TDS creates hardship, financial inconvenience to the first petitioner, even then, that circumstance itself cannot be a valid or legal ground to take out the payments received by the payee from the patrons for use of the hotel rooms in pursuance of agreements between them from the purview of "rent" as defined in the Explanation to section 194-I. If TDS results in hardship, financial burden on the recipient, Parliament itself has made the provision in section 197 for obtaining a certificate for deduction at lower rate or no deduction of income-tax. Section 197 of the Income-tax Act relating to certificate for deduction of income-tax at lower rate or for no deduction of income-tax in appropriate cases has been amended to include income by way of "rent" within the scope of the said section. Therefore, it is open for the first petitioner to make necessary application under section 197 if there is any justification or hardship for it to do so. In conclusion, we hold that the charges paid to the first petitioner-company by its customers like respondents Nos. 4 and 5, for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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