2003 (11) TMI 48

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....ired, under the provisions of the Act, to pay tax to the Government at the rates prescribed in the Act on the value of the luxury provided in the room. The assessee is required by section 6 of the Act to file a monthly return in the prescribed form. It is assessed to tax under section 7 at the end of the year. Along with the monthly returns, the hotelier is required to pay the tax having regard to the period for which the rooms had been occupied by its customers. Failure to file returns or failure to pay the amounts results in the imposition of penalties. Under the scheme of the Act, a person, who occupies a room in a hotel wherein any luxury is provided, is not made liable for tax. The occupant of the room is not required to pay dire....

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....r the Income-tax Act as the discharge of such a statutory liability is clearly an admissible deduction. The hotelier here seeks to put his case on a much higher plane. It is contended that the tax which the assessee is required to pay in terms of the Act is not an amount, even when it is an amount which had been charged to its customers and received from them which can be regarded as part of its trading receipts. The argument is that there is diversion of income by overriding title when the assessee collects tax from its customers. Though the argument so put forth is attractive nevertheless, having regard to the scheme of the Act, the liability fastens solely on the hotelier/assessee to pay the tax although the amount required to be p....