Income Tax Appellate Tribunal - Ahmedabad
Deputy Commissioner Of Income-Tax vs Bisleri Bewerages (P.) Ltd. on 20 April, 1992
Equivalent citations: [1992]42ITD128(AHD)
ORDER
K.R. Dixit, Judicial Member
1. In the Revenue's appeal there are four grounds. The first one is that the Commissioner (Appeals) erred in directing the IAC not to include Rs. 10,495 being hotel expenses while computing the disallowance under Section 37(3A). The, relevant part of the IAC's order is as follows :--
(iii) Hotel expenses in Franchise Seminar, Managing Training Seminar and Diners Club expenses are considered under the head hotel bills. Expenses which are disallowed under Rule 6D of Rs. 7,739 and lunch and dinner expenses disallowed under the head entertainment expenses are deducted while arriving at the expenses for hotel bills. Considering admissible deduction of Rs. 1 lakh, 20 per cent of the total expenses under Section 37(3B) has been disallowed and added to the income.
Before the Commissioner the assessee contended that it was the expenditure in an hotel which was includible under Section 37(3B) but was not expenditure in a restaurant, relying upon the definition of the word 'hotel' in the Expenditure Tax Act, 1987 and the Hotel Receipts Tax Act and in both those Acts 'hotel' means a building where residential accommodation is provided for making money. The Commissioner accepted that contention.
2. The learned Departmental Representative placed reliance upon the IAC's order. In reply, the learned counsel for the assessee advanced the same arguments as those before the Commissioner. He also argued that the specific word 'hotel' has been used and so the disallowance has to be confined to the application of that word alone. He referred to the dictionary meaning of that word and submitted that the meaning of the word 'hotel' in general parlance could not be applied here. Thus, the public in general might use the word 'hotel' as any eating house but that was not the meaning which should be applied here.
3. In our view, the contention on behalf of the assessee cannot be accepted. First of all meaning of the word 'hotel' in Expenditure Tax Acts and Hotel Receipts Tax Act cannot be applied here because those Acts have their own purpose and the meaning given to that word is for the purposes of those Acts. We have, therefore, to apply the general meaning of the term. Although according to the general meaning hotel is a place where residential accommodation is provided, if entertainment and eating facilities are also provided that would not be a disqualification. Therefore, a hotel would include a place where eating facilities are also provided. The word' hotel' has been used in the section in order to cover those cases where both residential and eating facilities are provided. If the word 'restaurant' had been used in the section the argument could have been raised that the expenditure was incurred in a hotel (which included a restaurant) and so the disallowance could not be made. Where a restaurant would be part of the hotel the payment would be made to the hotel and then the asscssee could argue that the payment has been made to a hotel. It is in order to meet this possible contention that the word 'hotel' had been used. It would not be proper to make the interpretation by taking the statute in one hand and the dictionary in the other. A sensible and reasonable meaning has to be made so that some definite purpose is served. The right approach in this connection is to bear in mind the purpose of this enactment and to so interpret ii so as to advance this purpose and to avoid the mischief. That purpose is to curb extravagant and socially wasteful expenditure on advertisement, publicity and sales promotion at the cost of the exchequer. For this purpose it would not matter whether the expenditure is incurred in a hotel or in a restaurant. If a distinction is drawn between these two there should be sonic purpose in it and, in our view, there would be no purpose in the Legislature drawing such a distinction. It could not have intended that if expenditure is incurred in a hotel it would be disallowed but if it was incurred in a restaurant it would be allowed. We asked this question to the learned counsel for the assessee but he was unable to enlighten us. For this reason, we hold that the expenditure is covered by Section 37(3A) and 37(3B). Therefore, this ground is allowed.
4 to 16. [These paras are not reproduced here, as they involve minor issues.]