Case Law Details
High Court held that under Expenditure Tax Act 1987 chargeable expenditure would be incurred only upon raising of a composite bill upon conclusion of hotel stay and not earlier.
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1. The substantial question of law raised by the Revenue in respect of assessment years 1995-96 and 1997-98 is as follows:
‘Whether on the facts and circumstances of the case, the Tribunal was right in deleting the addition made by the Assessing Officer under Section 7(4) and the interest charged thereon under Section 14 Expenditure Tax Act 1987 on bills not yet raised, although the expenditure had been incurred?’
2. The Assessee is in the business of running Hotels. Returns of Expenditure Tax were filed and orders of Assessment in terms of Section 9(2) of the Expenditure Tax Act 1987 (hereinafter referred to as ‘Act’) were issued by the Assessing Officer on 16.03.1998 and 31.03-2000 in respect of Assessment years 1995- 96 and 1997-98 respectively. In the course of Assessment, the Assessing Authority noted that the Assessee had offered to tax chargeable expenditure of an amount of Rs. 31,35,18,224/- as against which a sum of Rs. 3,28,82,659/- had been paid leaving a sum of Rs. 26,02,331/- outstanding. A stand was taken by the assessee at the time of assessment to the effect that the outstanding amount represented expenditure that was yet to be ‘incurred’ by the guests who had stayed at the hotels and that, upon such incurrence by the guests and collection by the hotel, the same would be paid over to the Government.
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