Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARDS :: VAT RATES :: ACCOUNTING STANDARD :: form 3cd :: TAX RATES - GOODS TAXABLE @ 4% :: TDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: articles on VAT and GST in India :: VAT Audit :: cpt :: list of goods taxed at 4% :: due date for vat payment :: empanelment :: ARTICLES ON INPUT TAX CREDIT IN VAT
 
 
News Headlines »
 GST dilemma: Hope fades for new tax regime
 5nance.com launches tax investment platform
 Is government tapping your phone?
 Income tax department to use analytics to look for discrepancies in bank accounts
 GST Council fails to break deadlock over indirect tax regime, next meet on Dec 11 and 12 to hammer out differences
 Invoking Writ Jurisdiction For Income Tax Matters
 How to file income-tax returns online
 How Income Tax Returns Are Scrutinised
 All About New Income Disclosure Scheme to make Demonetisation successful
 Your deposit may draw income tax notice
 Accepting payment under IDS 2016

No more 'taxing' time for city hotels
March, 09th 2009

Providing respite to city hotels, especially five-stars and business hotels, the Bombay high court, in a landmark judgment, has ruled that Tax Deducted at Source (TDS) would not be applicable to the services they provide. The verdict, by a division bench of Justices Ranjana Desai and J P Devadhar, quashed a circular issued by the Central Board of Direct Taxes (CBDT) and set to rest a 15-year-old controversy.

"The verdict will provide a huge relief to hotels,'' Hotel Restaurant Association of Western India (HRAWI) secretary S M Korde told TOI.

The 1994 circular said customers (usually corporates), while paying hotels for rooms and availing of facilities and amenities, would have to deduct tax at source under the Income Tax (I-T) Act. The TDS required to be cut was around 10%. Corporates form around two-thirds of the business of five-star hotels.

"The rule ensured that the daily cash flow was blocked and the hotels could claim any refunds only later,'' Korde said. The HRAWI said the Bombay high court judgment would help hotels across India. A petition filed by the association's parent body is pending in the Delhi high court. Korde added that the judgment would be cited as a precedent to get a favourable order.

The petition challenging the circular was filed by East India Hotels Ltd. It runs the Oberoi and the Trident on Marine Drive and has a chain of five-star hotels in other parts of the country. Besides rooms, the company said it provided a range of amenities to its clients, including highly trained and experienced multi-lingual staff, 24-hour service for reception, information and telephones, house-keeping, select restaurants, bank counters, beauty salons, barber shops, car rental
services, shopping centres, health clubs and business centres. The issue was whether these services came under the definition of "carrying out work'' under Section 194 C of the I-T Act, which the CBDT insisted it did.

But the high court did not agree. "Services rendered by a hotel to its customers by providing certain facilities and amenities do not constitute work (as defined by the Act),'' the judges said.

The controversy over the provision has a long history. Initially, the contracts for rendering professional services by lawyers, physicians, surgeons, engineers, accountants, architects and consultants were kept out of the ambit of the Act. In 1994, the CBDT said all types of contracts, including transport, service, advertisement, broadcasting, telecasting, labour, material and work contracts, would be liable to pay TDS.

When the courts held that such an interpretation was illegal, in 1995, the law was changed to include four types of service contracts within the purview of Section 194 C: advertising, broadcast, transport and catering contracts. The court held that the service provided by hotels did not fall under any of these categories.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - About Us

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions