PIEM HOTELS LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This is a reference u/s. 256(1) of the IT Act, 1961 ('the Act' for short) made by the Income-tax Appellate Tribunal, Bombay Bench 'E', Bombay ('Tribunal' for short) referring following two questions for the opinion of this Court; one at the instance of the assessee and, another at the behest of the Revenue, arising from its order dt. 6th Feb., 1986 passed in ITA No. 1721.Bom.1986, for the asst. yr. 1982-83 of which relevant accounting year ended on 31st March, 1982 :

(2.) This reference relates to the amount collected under the provisions of the Hotel Receipts Tax Act, 1980 ('HRT' Act) which received the assent of the Hon ble President of India on 9th Dec., 1980. This Act levied hotel receipts tax (HRT) at the rate of 15 per cent of the chargeable receipts w.e.f. 1st Feb., 1981.

(3.) The assessee is engaged in the business of running chain of 5 star hotels. The assessee had collected HRT in the sum of Rs. 14,55,241 during the period 1st Feb., 1981 to 31st March, 1982. The present reference relates to the period 1st April, 1981 to 31st March, 1982, which was the relevant accounting year. During this period, the HRT collection was in the sum of Rs. 84,95,503. The assessee did not pay HRT collected and payable under the HRT Act but chose to challenge the constitutional validity of the said legislation before the Hon ble Supreme Court of India along with various hotelliers as well as the hotel associations by way of writ petition. The Hon ble Supreme Court stayed operation of the said Act during the pendency of the writ petition subject to the condition that in the event of assessee failing in the petition, they shall be liable to pay HRT irrespective of the fact whether or not they had collected HRT from its customers.