TaxTMI 
TaxTMI 
2012 (4) TMI 730
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....tition No.1145/2010 is taken as a lead matter since the facts in all these writ petitions are somewhat common. The petitioner is a society registered under the Societies Registration Act, 1860, established solely for the purpose of promoting and fostering the growth and development of the Indian Fashion industry. It organizes the India Fashion week, business-to-business interaction events and other Fashion shows. It is claimed that these are not ticketed events and that entry to the Fashion shows/ Fashion weeks is exclusively by invitation, both for domestic and international buyers, associated professionals and media. It was granted 100% exemption from the liability to pay entertainment tax under the Act in respect of the events held from the year 2002 to the year 2004; the exemption was reduced to 50% in respect of the events held in the years 2008 and 2009. Thereafter the Government of NCT, Delhi refused the grant of exemption from entertainment tax for all subsequent Fashion events conducted or organized by the petitioner. 3. The petitioner applied for exemption from payment of entertainment tax under Section 14 of the Act regarding Fashion week....
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....s the Fashion show amounts to an "entertainment". The other contention raised by the petitioner was that the sponsorship amount received in respect of the Wills Lifestyle India Fashion Week was not "payment for admission to the entertainment" and therefore not chargeable to entertainment tax. This contention was also rejected by the AETO, relying upon the inclusive definition of the term "payment for admission" in Section 2 (m) of the Act. According to him under Section 2 (m) (i), any payment made by a person for seats or other accommodation in any form in a place of entertainment was chargeable to entertainment tax. He also referred to definition of the term "admission to entertainment " in Section 2 (a) of the Act. According to him Section 2 (m) (i) read with Section 2 (a) of the Act covered the case of the petitioner and therefore it was liable to pay entertainment tax in respect of the Fashion show. The AETO also referred to and relied upon sub-sections (1) and (6) of Section 6 of the Act. Sub-section (1) of Section 6 is the charging Section, which charges tax on an entertainment. Subsection (6) says that where the payment f....
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....ions have been put forward before us on behalf of the petitioner. The first contention is based on the powers of delegation given under Section 4 of the Act to the government. According to Section 2 (j), "Government" means the Government of the National Capital Territory of Delhi. Section 4 is couched in the following words: - "4. Delegation (1) The government may, by notification, delegate all or any of its powers under this Act, except those under sections 3, 6, 7 and 45 to any person or authority subordinate to it. (2) The exercise of any powers delegated under sub-section (1) shall be subject to such restrictions, limitations or conditions as may be laid down by the government from time to time and shall also be subject to control and revision by government at any time." 8. Section 6 is the charging section and it provides for levy of entertainment tax in respect of all payments for admission to any entertainment, other than an entertainment to which Section 7 applies, at such rate not exceeding 100% of the payment as the government may notify from time to time. The sub-section further says that ....
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....not voluntarily pay." (underlining ours) 11. These observations of the Federal Court were adopted by the Supreme Court in Neptune Assurance Company Ltd. v. LIC of India, (1963) 48 ITR 144. In this decision it was observed that the assessment only particularised the amount of tax payable as per the rates fixed by the Finance Act and that it did not create a right to refund for the first time since that right had already come into existence as soon as according to the relative Finance Act it became ascertainable that the tax paid in advance had exceeded the tax payable. 12. In K.S.Venkataraman & Co. v. State of Madras, (1966) 60 ITR 112 the Supreme Court pithily observed as under: - "Let us now scrutinize the said machinery to ascertain its scope and ambit. Section 3 of the Income-tax Act is the charging section; it imposes a tax upon a person in respect of his income. As a learned author pithily puts it, "section 3 charges total income; section 4 defines its range; section 6 qualifies it; and sections 7 to 12B quantify it." 13. In Ahmed Ibrahim Sahigra Dhoraji v. CWT, (1981) 129 ITR 314, the Supreme Court summed up the position in ....
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.... However, the computation of the income has to take place separately by an order of assessment. These orders have to be passed by the officers executing the Income Tax Act. They merely give effect to the charge of the tax. If these principles are borne in mind it will be clear that Section 4(1) of the Act with which we are concerned cannot, in the very nature of things, enable the government to delegate its powers under Section 6. Despite the section, it is impossible to conceive of a delegation of the charge of tax because, as already pointed out, the charge is created by the statutory provision itself and it does not require any separate agency or order to create it. It is only to quantify the charge of tax that an order may have to be passed. It may be that Section 4(1) of the Act, when it also refers to Section 6, amongst other sections, was quite redundant but that is no reason to say that the AETO who merely quantified the charge of tax by passing an assessment order was a delegate of the charge of entertainment tax. What the AETO has done by passing the assessment orders is only to quantify the entertainment tax payable by the pet....
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....decide about the applicability of the relevant provisions of the Act. The AETO, as noted above, has not carried out this exercise and has rested his conclusion merely on the statutory provisions without ascertaining the basic facts or examining the terms and conditions of the sponsorship agreement. The entire exercise seems to us to be meaningless, if the factual background and the agreement between the parties have not been examined. The provisions of the Act have to be applied only to the facts gathered and governing the case and not in vacuo. We are therefore of the opinion that the impugned orders passed by the AETO have to be quashed. We accordingly issue a writ of certiorari quashing them. It is open to the AETO to examine the relevant facts including the terms and conditions of the sponsorship agreements and thereafter consider the applicability of the provisions of the Act and decide whether the petitioner is liable to pay entertainment tax or not, by passing fresh orders of assessment after hearing the petitioner. 17. So far as the contention of the petitioner against the order dated 10.09.2009 passed by the Government of NCT of Delhi....
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....eeds from payment for admission as defined in clause (1) of section 2 of an entertainment are to be devoted to philanthropic, religious or charitable purposes, without any deductions whatsoever on account of the expenses of the entertainment, it may, subject to the rules made under this Act, grant exemption to such entertainment from payment of tax under this Act on such terms and conditions as it may deem fit to impose. (5) Where any exemption from payment of tax is granted under sub-section (4), the proprietor of such entertainment shall furnish to the Commissioner such documents and records and in such manner as may be prescribed. (6) If the proprietor of an entertainment exempted under sub-section (4) fails to furnish the documents and records required under sub-section (5), or fails to comply with any conditions imposed or directions issued in this behalf, or if the government is not satisfied with the correctness of such documents or records, the government may cancel he (sic.) exemption so granted and thereupon the proprietor shall be liable to pay the tax which would have been payable had not the entertainment been so exempted. (7) The government ....
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....w years exemption from payment of entertainment tax was granted to FDCI for fashion weeks as the Government was of the opinion to support nascent fashion industry in Delhi to enable it to strengthen and to make Delhi a popular center for fashion. Its spin-of benefits to textiles industry, artisans/handicrafts and tourism sector was also taken into consideration. However, it was never intended that such exemptions will be granted perpetually. From the audit report and balance sheet submitted by FDCI, it is noted that the net current assets as on 31.3.2009 was Rs. 8.89 crores which includes cash and bank balances of Rs. 7.48 crores. Since the financial health of the organization is satisfactory, there is no convincing reason as to why exemption from payment of entertainment tax on fashion shows organized by it should be continued at the cost of Government revenue. However, considering the current scenario of recession in industrial and export sector and to protect Delhi as world class city in view of the forthcoming Commonwealth Games, the Government accepts the plea of the FDCI to grant exemption from payment of entertainment tax o....
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.... grant exemption to the petitioner from payment of entertainment tax only to the extent of 50% of the tax amount as a special case. In coming to this decision it seems to us that there is no flaw, irregularity or irrationality in the decision of the competent authority justifying interference under Article 226 of the Constitution of India. The relevant part of the impugned order which has been extracted by us hereinabove bear out the reasons for not accepting the claim of the petitioner in full. The petitioner has been treated fairly and objectively and we, therefore, decline to interfere. 21. In respect of the other writ petitions relevant to the other Fashion events the position is like this. In respect of the W.P. (C) 1169/2010, it is against the assessment order passed by the AETO on 10.09.2009 bringing to tax the sponsorship amount collected by the petitioner in respect of the Van Heusen India Men‟s Week, a Fashion show to be held from 11th to 13th September, 2009. For the reasons stated by us in W.P. (C) 1145/2010 the assessment order is quashed with the same directions. For this Fashion show also the Government of NCT of Delhi ....