ITO, Haridwar V. Disney Inn, Haridwar

ITA 1278/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97964 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 05-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANT GUPTA SENIOR
• Assessee Lawyers: TILAK RAJ

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI A.T. VARKEY, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.1278/DEL./2013 (ASSESSMENT YEAR : 2009-10) ITO, WARD 1, VS. M/S. DISNEY INN, HARDWAR. BHUPATWALA, HARDWAR. (PAN : AAFFD6252J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI TILAK RAJ, ADVOCATE REVENUE BY : SHRI HEMANT GUPTA, SENIOR DR DATE OF HEARING : 15.10.2015 DATE OF PRONOUNCEMENT : 27.11.2015 O R D E R PER A.T. VARKEY, JUDICIAL MEMBER : THIS APPEAL, AT THE INSTANCE OF THE REVENUE, IS FIL ED AGAINST THE ORDER OF THE CIT (APPEALS)-I, DEHRADUN DATED 31.12.2012 FOR THE ASSESSMENT YEAR 2009-10. 2. THE SOLE ISSUE BEFORE US IS WHETHER THE AO WAS C ORRECT IN DISALLOWING THE ASSESSEES CLAIM FOR DEDUCTION U/S 80IC OF THE INCOME-TAX ACT, 1961 (HEREINAFTER THE ACT) BY HOLDING THAT ECO-TOURIS M IS A CONDITION PRECEDENT FOR CLAIMING DEDUCTION U/S 80IC; AND SINCE THE ASSE SSEE FAILED TO PRODUCE ITA NO.1278/DEL./2013 2 NOC FROM POLLUTION CONTROL BOARD, THE SAME WAS NOT ALLOWED BY THE AO. NOW, THE REVENUE IS AGGRIEVED BY THE DECISION OF TH E LD. CIT (A) WHO HAS ALLOWED THE CLAIM OF THE ASSESSEE U/S 80IC OF THE A CT. 3. BRIEF FACTS ARE THAT THE ASSESSEE RUNS A HOTEL I N THE NAME OF HOTEL DISNEY INN AT BHUPATWALA, DISTT. HARDWAR IN THE ST ATE OF UTTARAKHAND. IT FURNISHED RETURN OF INCOME, CLAIMING DEDUCTION U/S 80IC OF THE ACT IN RESPECT OF THE INCOME CLAIMED TO HAVE BEEN DERIVED FROM THE SAID HOTEL. THE AO EXAMINED THE ASSESSEES CLAIM AND FOUND IT TO BE IN ADMISSIBLE BECAUSE, ACCORDING TO THE AO, THE ECO-TOURISM IS A CONDITION PRECEDENT TO BE COMPLIED WITH BY THE ASSESSEE HOTEL FOR CLAIMING DEDUCTION U /S 80IC OF THE ACT AND SINCE THE ASSESSEE FAILED TO PRODUCE THE NOC FROM THE POLLUTION CONTROL BOARD WHICH ACCORDING TO HIM, IS MANDATORY AND PRE- REQUISITE CONDITION FOR QUALIFYING THE HOTEL AS ECO-TOURISM IN ORDER TO BE ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT, THE AO DISALLOWED THE CLAIM OF THE ASSESSEE HOTEL. 4. AGGRIEVED BY THE SAID ORDER OF THE AO, THE ASSES SEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, IN WHICH THE ASSESSEE CITED SIMILAR CASES OF HOTELS LIKE ASSESSEE, WHICH HAD ALSO CLAIMED 80IC D EDUCTION HAD BEEN ALLOWED BY THE TRIBUNAL; AND ON THE STRENGTH OF THE SE ORDERS OF THE TRIBUNALS DECISION IN RESPECT OF SIMILAR HOTELS, SIMILARLY SI TUATED IN THE STATE OF UTTARAKHAND AND HIMACHAL PRADESH CLAIMED BEFORE THE LD. CIT(A) THAT THE CLAIM MADE BY THE ASSESSEE HOTEL BEFORE THE AO QUAL IFIES FOR 80IC DEDUCTION. ITA NO.1278/DEL./2013 3 THE LD. CIT (A), AFTER ELABORATELY DISCUSSING THE L EGISLATIVE INTENT AND AFTER GOING THROUGH THE LEGISLATIVE HISTORY AND CASE LAWS ON THE SUBJECT, HELD AS FOLLOWS :- 1.24 IT HAS BEEN SUBMITTED BY THE ASSESSEE THAT TH ERE IS NOTHING IN THE IT ACT WHICH WOULD SUGGEST THAT HAVING THE N OC IS A NECESSARY CONDITION FOR THE SAID DEDUCTION. IT HAS ALSO BEEN SUBMITTED IN MANY CASES THAT THE ASSESSEES CONCERNE D APPLIED FOR THE NOC, OFTEN WITH A RETROSPECTIVE PERIOD (COV ERING THE PREVIOUS YEAR IN QUESTION) AND ALSO GOT THE SAME. I T IS, HOWEVER, NOTICED THAT THE NOCS HAVE BEEN GIVEN SPECIFICALLY SINCE THE DATE OF THE APPLICATION EVEN THOUGH NOC FOR THE PAS T PERIOD HAS NOT BEEN DENIED EXPLICITLY NOR HAVE THE FEES PAID F OR THE PAST BEEN REFUNDED BY THE POLLUTION CONTROL BOARD. ACCOR DING TO THESE ASSESSES, IN THIS SITUATION, THE NOC SHOULD B E DEEMED TO HAVE BEEN GIVEN FOR THE PAST ALSO. BUT, THAT QUESTI ON WOULD NEED TO BE ANSWERED ONLY IF IT WERE HELD THAT THE EXISTE NCE OF THE NOC FOR THE PREVIOUS YEAR NEEDS TO BE ESTABLISHED A S A FACT. AS. DISCUSSED ABOVE, THE RATIO OF THE DECISIONS OF THE HON. ITAT (SUPRA) IS THAT THE NOC SHOULD NOT HAVE BEEN DENIED . IT IS NEGATION OF NEGATIVE; NOT ASSERTION OF POSITIVE. 1.25 ACCORDING TO MY UNDERSTANDING OF THE RATIO OF THE DECISIONS (SUPRA), DEDUCTION SHOULD BE ALLOWED IF T HE ASSESSEE SATISFIED THE FOLLOWING CONDITIONS: I. IT IS A HOTEL II. IT HAS A VALID LICENSE III. NOC FROM THE POLLUTION CONTROL BOARD HAS NOT BEEN DENIED TO IT. SINCE, THE ASSESSEE IN QUESTION FULFILS ALL THESE C ONDITIONS, IT IS HELD, FOLLOWING THE RATIO OF THE DECISIONS OF THE H ON. ITAT IN THE CASES OF BIDHI CHAND SINGHAL AND ANCHAL HOTELS (SUPRA) THAT THE ASSESSEE SHOULD BE GIVEN THE BENEFIT OF DE DUCTION U/S 80-IC OF THE I.T. ACT. IN THIS CONNECTION, IT NEEDS TO BE PUT ON RECORD THAT, WHILE DECIDING AN APPEAL EARLIER (APPE AL NO.27/HDR/2009-10: MR. SUNDER LAL SEMWAL: AY 2007-0 8), I HAD HELD THAT, IF THE ASSESSEE DID NOT HAVE THE N OC, THE DEDUCTION SHOULD NOT BE ALLOWED TO IT. BUT, ON A DE EPER ITA NO.1278/DEL./2013 4 APPRECIATION OF THE FACTS AND CIRCUMSTANCES AS WELL AS THE PROVISION OF LAW, I AM OF THE VIEW THAT, IF THE RAT IO OF THE DECISIONS OF THE HON. ITAT IS APPLIED PROPERLY, DED UCTION SHOULD NOT BE DENIED SIMPLY BECAUSE THE ASSESSEE IS UNABLE TO SHOW THAT IT HAS THE NOC FROM THE POLLUTION CONTROL BOARD. THE AO IS DIRECTED TO ALLOW THE DEDUCTION. 5. THE REVENUE, BEING AGGRIEVED BY THE SAID DECISIO N OF THE LD. CIT (A), IS IN APPEAL BEFORE US. 6. LD. DR, RELYING ON THE DECISION OF THE AO, CONTE NDED THAT FOR PROMOTION OF ECO-TOURISM, THE HOTEL IN THE STATE OF UTTARAKHAND IN ORDER TO CLAIM DEDUCTION U/S 80IC OF THE ACT SHOULD HAVE HAD ENVIRONMENTAL AND POLLUTION CONTROL BOARD NOC IN ITS POSSESSION BEF ORE CLAIMING DEDUCTION U/S 80IC OF THE ACT; AND THE LD. CIT (A) ERRED IN N OT TAKING INTO CONSIDERATION THE FACT THAT ECO-TOURISM IS A CONDITION PRECEDENT FOR BEING ELIGIBLE TO QUALIFY FOR 80IC DEDUCTION. THE ASSESSEE WAS DIRECTED TO B RING ON RECORD THE NOC OF THE POLLUTION CONTROL BOARD , WHICH THE ASSESSEE FAIL TO DO. SO THE LD. AO HAD NO OTHER ALTERNATIVE BUT TO DENY DEDUCTION U/S 80IC OF THE ACT FOR THE SAID ASSESSEE HOTEL. SO, ACCORDING TO THE LD. DR, SINCE THE LD. CIT (A) HAS ERRED IN NOT TAKING INTO CONSIDERATION THIS IMPORTANT LEGAL REQUIREMENT BEFORE GIVING DISALLOWANCE U/S 80IC OF THE ACT, THE LD. DR PRAYS THAT THE ORDER OF THE LD. CIT (A) BE REVERSED AND THE AOS ORDER BE RESTORED. 7. ON THE OTHER HAND, THE LD. AR SUBMITTED THAT THI S IS THE THIRD YEAR OF THE OPERATION OF THE ASSESSEES HOTEL AND FOR THE FIRST TWO YEARS, SINCE IT WAS RUNNING AT A LOSS, IT DID NOT CLAIM ANY DEDUCTION U /S 80IC OF THE ACT FOR THOSE ITA NO.1278/DEL./2013 5 YEARS. AND THIS IS THE FIRST YEAR IT HAS CLAIMED D EDUCTION U/S 80IC OF THE ACT. ACCORDING TO THE LD. AR, SIMILAR HOTELS IN THE STAT E OF UTTARAKHAND AND HIMACHAL PRADESH HAVE BEEN GIVEN 80IC DEDUCTION AND FOR NO REASON, THE AO HAS DENIED THIS DEDUCTION TO IT, SIMPLY BY ASKING F OR THE NOC FROM THE POLLUTION CONTROL BOARD WHICH, ACCORDING TO LD. AR, IS NOT A REQUIREMENT AS PER LAW. FURTHER, THE LD. AR CONTENDED THAT THE FI NDING OF THE AO THAT ECO- TOURISM IS A CONDITION-PRECEDENT AND NOC FROM POL LUTION CONTROL BOARD IS SOMETHING WHICH, THE LAW DOES NOT STIPULATE AND, TH EREFORE, ON THE REASON THAT NOC FROM POLLUTION CONTROL BOARD HAS NOT BEEN PRODU CED BEFORE HIM, CANNOT BE A GROUND FOR DENYING THE 80IC DEDUCTION. ACCORD ING TO THE LD. AR, THIS ISSUE IS NO LONGER RES INTEGRA AND IN A PLETHORA OF DECISIONS, THIS TRIBUNAL HAS HELD THAT HOTELS SITUATED AT HARDWAR, UTTARAKHAND Q UALIFIES FOR 80IC DEDUCTION AND, THEREFORE, THE LD. CIT (A) HAS RIGHTLY GRANTED THE SAME TO THE ASSESSEE. SO HE PRAYS THAT THE IMPUGNED ORDER MAY NOT BE DIST URBED. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. WE TAKE NOTE OF THE FACT THAT ASSESSEE IS A HOTEL, SIT UATED AT HARDWAR, IN THE STATE OF UTTARAKHAND AND THE INSTANT ASSESSMENT YEAR IS T HE 3 RD YEAR OF ITS OPERATION AND SINCE IT WAS RUNNING ON LOSS FOR THE LAST TWO A SSESSMENT YEARS IT HAS NOT AVAILED FOR THE 80IC DEDUCTION AND THIS IS THE FIRS T YEAR IT HAS CLAIMED 80IC DEDUCTION. IN RESPECT TO THE CLAIM OF THE ASSESSEE HOTEL THAT IT IS ELIGIBLE FOR 80IC DEDUCTION, WE FIND FORCE IN THE CONTENTION OF THE LD. AR THAT THIS ISSUE IS ITA NO.1278/DEL./2013 6 NO LONGER RES INTEGRA. THE CONTENTION OF THE AO TH AT NOC FROM THE POLLUTION CONTROL BOARD IS A REQUIREMENT FOR SATISFYING ECO- TOURISM WHICH IS A CONDITION PRECEDENT FOR BEING ELIGIBLE FOR 80IC DED UCTION HAS BEEN CONSIDERED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN SHRI BI DHI CHAND SINGHAL VS. ITO, RUDRAPUR IN ITA NO.3419/DEL/2009 FOR ASSESSMEN T YEAR 2006-07 DATED 04.11.2010 AND THE TRIBUNAL HAS HELD AS UNDER :- 5. WE HAVE HEARD BOTH THE PARTIES, GONE THROUGH TH E ASSESSMENT ORDER AND ORDER OF CIT(A) AND RELEVANT P ROVISIONS WHICH HAVE BEEN REFERRED BY THE AO AND CIT(A). THE PROVISIONS AS CONTAINED IN SECTION 80IC AND AS RELE VANT TO THE CASE OF THE ASSESSEE ARE AS UNDER:- 80-IC. (1) WHERE THE GROSS TOTAL INCOME OF AN ASSE SSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERT AKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SEC TION (2), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVIS IONS OF THIS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFITS AND GAINS, AS SPECIFIED IN SUB-SECTION (3). (2) THIS SECTION APPLIES TO ANY UNDERTAKING OR ENTE RPRISE,- (A) ............ (B) WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PRO DUCE ANY ARTICLE OR THING, SPECIFIED IN THE FOURTEENTH SCHED ULE OR COMMENCES ANY OPERATION SPECIFIED IN THAT SCHEDULE, OR WHICH MANUFACTURES OR PRODUCES ANY ARTICLE OR THING, SPEC IFIED IN THE FOURTEENTH SCHEDULE OR COMMENCES ANY OPERATION SPEC IFIED IN THAT SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING- (I) .................. ITA NO.1278/DEL./2013 7 (II) ON THE 7 TH DAY OF JANUARY, 2003 AND ENDING BEFORE THE 1 ST DAY OF APRIL, 2012, IN THE STATE OF HIMACHAL PRADESH OR THE STATE OF UTTARANCHAL; OR (III) .................. ITEM NO.15 OF PART C OF THE FOURTEENTH SCHEDULE REA DS AS UNDER:- 15. ECO-TOURISM INCLUDING HOTELS, RESORTS, SPA, ENTERTAINMENT/AMUSEMENT PARKS AND ROPEWAYS. 6. FROM THE ABOVE SECTION AND ITEM NO.15 OF PART C OF THE FOURTEENTH SCHEDULE, IT CAN BE OBSERVED THAT WHAT I S ELIGIBLE FOR DEDUCTION IS ECO-TOURISM WHICH INCLUDE INTER ALIA H OTELS. IT HAS BEEN THE CONTENTION OF THE ASSESSEE THAT HIS HOTEL IS APPROVED BY THE GOVERNMENT. THE HOTEL CANNOT BE APPROVED BY THE GOVERNMENT WITHOUT OBTAINING NO OBJECTION FROM THE POLLUTION DEPARTMENT. THERE IS NO MATERIAL ON RECORD TO SHOW THAT POLLUTION DEPARTMENT OF THE GOVERNMENT HAS NOT GIVE N NO OBJECTION TO THE ASSESSEE. IF IT IS SO, THEN, IT CA NNOT BE SAID THAT THE ASSESSEE IS RUNNING A HOTEL WHICH IS OUTSIDE TH E NORMS PRESCRIBED BY THE POLLUTION DEPARTMENT. IF A PLAIN READING IS GIVEN TO ITEM NO.15 REPRODUCED ABOVE, THEN, ECO-TOU RISM INTER ALIA INCLUDE HOTELS. NO MATERIAL HAS BEEN BROUGHT O N RECORD TO SHOW THAT ECO-TOURISM STATUS HAS BEEN GRANTED TO ANY OTHER HOTEL AND WHICH STATUS ASSESSEE DOES NOT HAVE. IF T HE LOGIC APPLIED BY THE ASSESSING OFFICER AND CIT (A) IS MAD E APPLICABLE, THEN, THE HOTELS WHICH ARE NOT HAVING T HE ALLEGED ECO-TOURISM STATUS CANNOT BE HELD TO BE ENTITLED TO DEDUCTION U/S 80-IC. IF NONE OF THE HOTELS CAN BE GRANTED DED UCTION U/S 80- IC, THEN, THE ITEM NO.15 OF PART C OF THE FOURTEENT H SCHEDULE WILL BE REDUNDANT. THEREFORE, IN OUR OPINION, IN TH E ABSENCE OF DEFINITION OF ECO-TOURISM THE HOTEL AS ADDED INTO THE ITEM NO.15 OF PART C IS TO BE CONSTRUED TO BE HOTEL SITU ATED IN THE STATE OF HIMACHAL PRADESH OR THE STATE OF UTTARANCH AL HAVING A VALID LICENCE ON THE BASIS OF NO OBJECTION FROM POL LUTION DEPARTMENT WHICH CAN BE TREATED TO BE A HOTEL ELIGI BLE FOR DEDUCTION U/S 80IC AS PER PROVISIONS OF SECTION 80I C. THEREFORE, WE ALLOW THE CLAIM OF DEDUCTION U/S 80-I C TO THE ASSESSEE AND THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.1278/DEL./2013 8 RESPECTFULLY CONCURRING WITH THE AFORESAID DECISION , WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE FALLS IN THE KEN OF ECO-T OURISM WHICH QUALIFIES FOR DEDUCTION U/S 80IC OF THE ACT AND, THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT (A) WHICH WARRANTS ANY INTERFE RENCE ON OUR PART. ACCORDINGLY, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE AND THE APPEAL STANDS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 27 TH DAY OF NOVEMBER, 2015. SD/- SD/- (PRASHANT MAHARISHI) (A.T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 27 TH DAY OF NOVEMBER, 2015 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-I, DEHRADUN. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.