INCOME TAX

Clarification on applicability of the Expenditure-tax Act, 1987

Circular No. 679

Dated 11/2/1994

The Board, vide Circular No. 645, dated 15-3-1993 (see [1993] 200 ITR (St.) 228) read with Circular No. 650, dated 31-5-1993 (see [1993] 202 ITR (St.) 18) had clarified that luxury tax and such other taxes levied by the State Government will form part of the "room charges" for the determination of applicability of the Expenditure-tax Act to any particular hotel.

2. The Income-tax Appellate Tribunal has recently given a finding contrary to the above view of the Board. After examination of the whole issue afresh, it has been decided to accept the view of the Income-tax Appellate Tribunal holding against inclusion of the luxury tax as a part of the "room charges" under section 2(10) of the Expenditure-tax Act. The circulars of the Board referred above are accordingly being withdrawn with immediate effect.

(Sd.) M. N. Dikshit,

Director (OT),

Central Board of Direct Taxes.