ITO, Roorkee V. Sh. Chhotey Lal Gupta, Roorkee

ITA 1285/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98098 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• 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
• Keywords: Rule of consistency
• Section: 143(3)

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.1285/DEL./2013 (ASSESSMENT YEAR : 2009-10) ITO, WARD 1, VS. SHRI CHHOTEY LAL GUPTA, NEW DELHI. 48, CIVIL LINES, ROORKEE. (PAN : ACFPG2028P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SOMIL AGARWAL, CA REVENUE BY : SHRI HEMANT GUPTA, SENIOR DR DATE OF HEARING : 15.10.2015 DATE OF PRONOUNCEMENT : 11.12.2015 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 ASSES SEE FAILED TO PRODUCE NOC ITA NO.1285/DEL./2013 2 FROM POLLUTION CONTROL BOARD, THE SAME WAS NOT ALLO WED BY THE AO. NOW, THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LD. CIT (A) WHO HAS ALLOWED THE CLAIM OF THE ASSESSEE U/S 80IC OF THE ACT. 3. BRIEF FACTS ARE THAT THE ASSESSEE RUNS THREE HOT ELS AT ROORKEE IN UTTARAKHAND. IT FURNISHED RETURN OF INCOME CLAIMIN G DEDUCTION U/S 80IC OF THE ACT IN RESPECT OF THE INCOME CLAIMED TO HAVE BE EN DERIVED FROM THE SAID HOTELS. THE AO EXAMINED THE ASSESSEES CLAIM AND F OUND IT TO BE INADMISSIBLE BECAUSE, ACCORDING TO THE AO, THE ECO- TOURISM IS A CONDITION PRECEDENT TO BE COMPLIED WITH BY THE ASSESSEE HOTEL S FOR CLAIMING DEDUCTION U/S 80IC OF THE ACT AND SINCE THE ASSESSEE FAILED T O 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 DE DUCTION, WHICH 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 TH E LD. CIT (A) THAT THE CLAIM MADE BY THE ASSESSEE HOTEL BEFORE THE AO QUAL IFIES FOR 80IC DEDUCTION. ITA NO.1285/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.1285/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 FAILED 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. ITA NO.1285/DEL./2013 5 7. ON THE OTHER HAND, THE LD. AR SUBMITTED THAT HE HAS THREE HOTELS, NAMELY, HOTEL PREM DYNASTY, HOTEL DYNASTY AND HOTE L PREM AAANSH. HE POINTED OUT THAT THE ASSESSEE HAS CLAIMED 80IC DEDU CTION IN RESPECT OF HOTEL PREM DYNASTY FROM 2005-06, HOTEL DYNASTY FROM 2006- 07 AND HOTEL PREM AAANSH FROM 2008-09. LD. AR ALSO POINTED OUT THAT 80IC DEDUCTION WAS ALLOWED FOR THE CLAIMS MADE IN RESPECT OF THESE HOT ELS BY SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT, WHEREIN THE CLAIM OF THE 80I C DEDUCTION WAS ALLOWED FOR THREE HOTELS. ONLY, IN THIS ASSESSMENT YEAR 20 09-10, THE AO HAS NOT ALLOWED 80IC CLAIM OF THE ASSESSEE. ACCORDING TO T HE LD. AR, AS PER THE RULE OF CONSISTENCY, THE AO SHOULD NOT HAVE DISALLOWED T HE CLAIM OF THE ASSESSEE. 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 ITA NO.1285/DEL./2013 6 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 HAS THREE HOTEL S IN THE STATE OF UTTARAKHAND, NAMELY, HOTEL PREM DYNASTY, HOTEL DYNASTY AND HOTE L PREM AAANSH. WE FIND THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80 IC IN RESPECT OF HOTEL PREM DYNASTY FROM 2005-06, HOTEL DYNASTY FROM 2006-07 AN D HOTEL PREM AAANSH FROM 2008-09 AND THE 80IC DEDUCTION WAS GRANTED BY THE AO FROM AY 2005- 06 WHICH WAS COMPLETED U/S 143(3) ASSESSMENT AND IN THE SUBSEQUENT AY 2009-10 ALSO, THE AO HAS ALLOWED DEDUCTION UNDER SC RUTINY ASSESSMENT. WE FIND FORCE IN THE ARGUMENTS OF THE LD. AR THAT AS P ER THE RULE OF CONSISTENCY, SINCE THE FACTS PERMEATING IN THE EARLIER YEARS HAV E NOT CHANGED, THE AO OUGHT NOT TO HAVE CHANGED THE CONSISTENT STAND OF THE REV ENUE. BE THAT AS IT MAY BE, LET US EXAMINE WHETHER THE AOS ACTION IS AS PER LA W WHEN HE DISALLOWED THE CLAIM U/S 80IC OF THE ACT. 8.1 IN RESPECT TO THE CLAIM OF THE ASSESSEES HOTEL S THAT IT IS ELIGIBLE FOR 80IC DEDUCTION, WE FIND FORCE IN THE CONTENTION OF THE L D. AR THAT THIS ISSUE IS NO LONGER RES INTEGRA. THE CONTENTION OF THE AO THAT 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. ITA NO.1285/DEL./2013 7 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 PROVISIONS WHICH H AVE BEEN REFERRED BY THE AO AND CIT(A). THE PROVISIONS AS CONTAINED IN S ECTION 80IC AND AS RELEVANT 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 UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SECTION (2), THERE SHAL L, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOW ED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFI TS 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 SCHEDULE OR COMM ENCES ANY OPERATION SPECIFIED IN THAT SCHEDULE, OR WHICH MANUFACTURES O R PRODUCES ANY ARTICLE OR THING, SPECIFIED IN THE FOURTEENTH SCHEDULE OR C OMMENCES ANY OPERATION SPECIFIED IN THAT SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING- (I) .................. (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, EN TERTAINMENT/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 IS ELIGIBLE FOR DEDUCTION IS ECO- TOURISM WHICH INCLUDE INTER ALIA HOTELS. IT HAS BEE N THE CONTENTION OF THE ASSESSEE THAT HIS HOTEL IS APPROVED BY THE GOVERNME NT. THE HOTEL CANNOT BE APPROVED BY THE GOVERNMENT WITHOUT OBTAINING NO OBJECTION FROM THE POLLUTION DEPARTMENT. THERE IS NO MATERIAL ON RECOR D TO SHOW THAT POLLUTION DEPARTMENT OF THE GOVERNMENT HAS NOT GIVE N NO OBJECTION TO THE ASSESSEE. IF IT IS SO, THEN, IT CANNOT BE SAID THAT THE ASSESSEE IS RUNNING A HOTEL WHICH IS OUTSIDE THE NORMS PRESCRIBED BY THE POLLUTION DEPARTMENT. IF A PLAIN READING IS GIVEN TO ITEM NO.15 REPRODUCE D ABOVE, THEN, ECO- TOURISM INTER ALIA INCLUDE HOTELS. NO MATERIAL HAS BEEN BROUGHT ON RECORD ITA NO.1285/DEL./2013 8 TO SHOW THAT ECO-TOURISM STATUS HAS BEEN GRANTED TO ANY OTHER HOTEL AND WHICH STATUS ASSESSEE DOES NOT HAVE. IF THE LOGIC A PPLIED BY THE ASSESSING OFFICER AND CIT (A) IS MADE APPLICABLE, THEN, THE H OTELS WHICH ARE NOT HAVING THE ALLEGED ECO-TOURISM STATUS CANNOT BE H ELD TO BE ENTITLED TO DEDUCTION U/S 80-IC. IF NONE OF THE HOTELS CAN BE G RANTED DEDUCTION 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 THE ABSENC E OF DEFINITION OF ECO- TOURISM THE HOTEL AS ADDED INTO THE ITEM NO.15 OF PART C IS TO BE CONSTRUED TO BE HOTEL SITUATED IN THE STATE OF HIMA CHAL PRADESH OR THE STATE OF UTTARANCHAL HAVING A VALID LICENCE ON THE BASIS OF NO OBJECTION FROM POLLUTION DEPARTMENT WHICH CAN BE TREATED TO BE A H OTEL ELIGIBLE FOR DEDUCTION U/S 80IC AS PER PROVISIONS OF SECTION 80I C. THEREFORE, WE ALLOW THE CLAIM OF DEDUCTION U/S 80-IC TO THE ASSESSEE AN D THE APPEAL OF THE ASSESSEE IS ALLOWED. THEREFORE, IN OUR OPINION, THE ASSESSEE FALLS IN TH E KEN OF ECO-TOURISM WHICH QUALIFIES FOR DEDUCTION U/S 80IC OF THE ACT AND, TH EREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT (A) WHICH WARRANT S ANY INTERFERENCE 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 11 TH DAY OF NOVEMBER, 2015. SD/- SD/- (PRASHANT MAHARISHI) (A.T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 11 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.