West-Inn Limited, Ahmedabad V. The ACIT.,Circle-8, Ahmedabad

ITA 2229/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1241 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 14-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NOS: 2228 & 2229AHD/2011 (ASSESSMENT YEAR: 2007-08 & 2008-09) WEST-INN LIMITED C/O. HOTEL FORTUNE LANDMARK, USMANPURA CHAR RASTA, ASHRAM ROAD, AHMEDABAD-14 V/S ACIT CIRCLE-8, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACW3363P APPELLANT BY : MS. URVASHI SHODHAN RESPONDENT BY : SHRI PRASOON KABRA, SR. D.R. ( )/ ORDER DATE OF HEARING : 14-06-201 6 DATE OF PRONOUNCEMENT : 20 -06-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THESE TWO APPEALS BY THE ASSESSEE ARE PREFERRED AGA INST THE ORDER OF THE LD. CIT(A)-XIV, AHMEDABAD DATED 22.07.2011 PERT AINING TO A.Y. 2007-08 & 2008-09. ITA NO.2228 & 2229/AHD/2011 . A.Y. 2007-0 8 & 2008-09 2 2. SINCE THE FIRST APPELLATE AUTHORITY HAS DISPOSED TH E IMPUGNED APPEALS BY A CONSOLIDATED ORDER, THESE WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE . 3. THE COMMON GRIEVANCE IN BOTH THESE APPEALS RELATE T O THE DENIAL OF THE CLAIM OF DEDUCTION U/S. 80IB(7)(B) OF THE ACT R EAD WITH RULE 18BBC. 4. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE IS IN THE BUSINESS OF HOTEL. THE RETURNS FOR THE IMPUGNED ASS ESSMENT YEARS WERE SELECTED FOR SCRUTINY ASSESSMENT. WHILE SCRUTI NIZING THE RETURN OF INCOME, THE A.O. FOUND THAT THE ASSESSEE HAS CLAIME D DEDUCTION U/S. 80IB(7)(B) OF THE ACT. ON FURTHER PROBE, THE A.O. F OUND THAT THE ASSESSEE HAS BEEN CLASSIFIED AS A FIVE STAR HOTEL W ITH EFFECT FROM 25.02.2008. THE ASSESSEE WAS ASKED TO JUSTIFY ITS C LAIM OF DEDUCTION U/S. 80IB(7)(B) OF THE ACT. ASSESSEE FILED A DETAIL ED REPLY WHICH READS AS UNDER:- AS FAR AS SECTION 80IB(7)(B) IS CONCERN THE HOTEL IS FOR THE TIME BEING APPROVED BY THE PRESCRIBED AUTHORITY. AS PER RULE 1 8 BBC OF THE INCOME TAX RULES THE PRESCRIBED AUTHORITY SHALL BE DIRECTO R GENERAL IN THE DIRECTORATE GENERAL OF TOURISM, GOVT. OF INDIA. WE HAVE GOT THE APPROVAL FROM THE DEPARTMENT OF TOURISM, GOVT. OF INDIA AND THE SAME APPROVAL HAS BEEN GIVEN BY THE DY. DIRECTOR OF GENERAL, DEPARTME NT OF TOURISM. THE COMPANY HAD APPLIED FOR APPROVAL OF THE HOTEL AND A S PER THE PROCEDURE PRESCRIBED Y THE GOVT. THE APPROVAL HAS BEEN SIGNED BY THE APPROPRIATE AUTHORITY. THE INTERPRETATION OF THE RULES 18BBC HA T THE PRESCRIBED AUTHORITY MEANS ONLY DIRECTOR GENERAL AND NOT DY. D IRECTOR GENERAL IS AS PER OUR UNDERSTANDING IS NOT IN THE SPIRIT OF LAW. IN GOVT. ORGANIZATION THE DELEGATION OF POWER IS SPECIFIC AND THE PERSON AUTH ORIZED IS ONLY SIGNING ITA NO.2228 & 2229/AHD/2011 . A.Y. 2007-0 8 & 2008-09 3 THE DOCUMENTS. WE ARE OF THE OPINION THAT FOR SUCH TECHNICAL MATER THE DEDUCTION AVAILABLE U/S. 80IB CANNOT BE DENIED. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND AFTER PERUSING THE DOCUMENTARY EVIDENCES FILED IN SUPPORT OF THE C LAIM, THE A.O WAS OF THE OPINION THAT THE CERTIFICATES SUBMITTED BY T HE ASSESSEE IS NOT BY THE PRESCRIBED AUTHORITY AS PROVIDED U/S. 80IB(7)(B ) OF THE ACT. 6. THE A.O. WAS OF THE FIRM BELIEF THAT SINCE THE ASSE SSEE HAS NOT FULFILLED THE ELIGIBILITY CRITERIA FOR CLAIMING THE DEDUCTION U/S. 80IB(7)(B) OF THE ACT, THE DEDUCTION CANNOT BE ALLOWED AND ACCORDINGL Y MADE THE IMPUGNED ADDITIONS. 7. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 8. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REITERA TED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. IN SUPPORT OF HER CONTENTION, OUR ATTENTION WAS DRAWN TO THE RELEVANT CERTIFICATES IS SUED BY THE MINISTRY OF TOURISM. IT IS THE SAY OF THE COUNSEL THAT THE C ERTIFICATES HAVE BEEN ISSUED BY A GOVERNMENT AUTHORITY AND, THEREFORE, CA NNOT BE RUBBISHED JUST LIKE THAT. THE LD. COUNSEL CONTINUED BY STATIN G THAT THE ASSESSEE HAS FULFILLED ALL THE NECESSARY CONDITIONS FOR GETT ING THE DEDUCTION U/S. 80IB(7)(B) OF THE ACT. 9. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FIN DINGS OF THE REVENUE AUTHORITIES. ITA NO.2228 & 2229/AHD/2011 . A.Y. 2007-0 8 & 2008-09 4 10. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW AND HAVE ALSO PERUSED THE RELEVAN T DOCUMENTARY EVIDENCES BROUGHT ON RECORD AND REFERRED TO DURING THE COURSE OF THE HEARING. 11. LET US, FIRST SEE THE RELEVANT PROVISION OF THE ACT :- 80IB(7)(B)- THIRTY PER CENT OF THE PROFITS AND GAI NS DERIVED FROM THE BUSINESS OF SUCH HOTEL AS IS LOCATED IN ANY PLACE O THER THAN THOSE MENTIONED IN SUB-CLAUSE (A) FOR A PERIOD OF TEN CON SECUTIVE YEARS BEGINNING FROM THE INITIAL ASSESSMENT YEAR IF SUCH HOTEL HAS STARTED OR STARTS FUNCTIONING AT ANY TIME DURING THE PERIOD BE GINNING ON THE 1 ST DAY OF APRIL, 1991 AND ENDING ON THE 31 ST DAY OF MARCH, 1995 OR BEGINNING ON THE 1 ST DAY OF APRIL, 1997 AND ENDING ON THE 31 ST DAY OF MARCH, 2001: PROVIDED THAT NOTHING CONTAINED IN THIS CLAUSE SHAL L APPLY TO A HOTEL LOCATED AT A PLACE WITHIN THE MUNICIPAL JURISDICTIO N (WHETHER KNOWN AS A MUNICIPALITY, MUNICIPAL CORPORATION, NOTIFIED AREA COMMITTEE, TOWN AREA COMMITTEE OR A CANTONMENT BOARD OR BY ANY OTHER NAM E) OF CALCUTTA, CHENNAI, DELHI OR MUMBAI WHICH HAS STARTED OR START S FUNCTIONING ON OR AFTER THE 1 ST DAY OF APRIL, 1997 AND BEFORE THE 31 ST DAY OF MARCH, 2001: 12. THE RELEVANT RULE IS 18BBC WHICH READS AS UNDER:- 18BBC (1) FOR THE PURPOSES OF SUB-CLAUSE (III) OF CLAUSE (C) OF SUB- SECTION (7) OF SECTION 80-IB, THE PRESCRIBED AUTHOR ITY,- (A) IN RELATION TO HOTELS LOCATED IN AN AREA OR PLA CE REFERRED TO IN CLAUSE (A) OF THAT SUB-SECTION, SHALL BE THE DIRECTOR GENE RAL (INCOME-TAX EXEMPTIONS) WHO SHALL GRANT APPROVAL ON THE CONCURR ENCE OF THE DIRECTOR GENERAL IN THE DIRECTORATE GENERAL OF TOUR ISM, GOVERNMENT OF INDIA; (B) IN RELATION TO HOTELS LOCATED IN ANY PLACE REFE RRED TO IN CLAUSE (B) OF THAT SUB-SECTION, SHALL BE THE DIRECTOR GENERAL IN THE DIRECTORATE GENERAL OF TOURISM, GOVERNMENT OF INDIA. ITA NO.2228 & 2229/AHD/2011 . A.Y. 2007-0 8 & 2008-09 5 (2). FOR THE PURPOSE OF CLAUSE (A) OF SUB-SECTION ( 7) OF SECTION 80-IB, A HOTEL SHALL BE APPROVED BY THE PRESCRIBED AUTHORITY IF THE FOLLOWING CONDITIONS ARE FULFILLED, NAMELY:- (A) SUCH HOTEL IS LOCATED IN AN AREA OR PLACE SPECI FIED UNDER CLAUSE (A) OF THE SAID SUB-SECTION(7); (B) THERE ARE NOT MORE THAN 300 HOTEL ROOMS OF 3-ST AR CATEGORY AND ABOVE IN THE AGGREGATE, IN AREAS OR PLACES SPECIFIE D UNDER CLAUSE (A) OF THE SAID SUB-SECTION (7) WITHIN THE JURISDICTION OF THE REVENUE SUB- DIVISION IN WHICH THE HOTEL IS LOCATED; (C) IN CASE THE HOTEL IS LOCATED IN A PLACE WHERE T HERE IS NEED FOR DEVELOPMENT OF INFRASTRUCTURE FOR TOURISM, SUCH PLA CE HAS BEEN SPECIFIED BY THE CENTRAL GOVERNMENT UNDER CLAUSE (A ) OF THE SAID SUB- SECTION (7) ON THE RECOMMENDATION OF THE DEPARTMENT OF TOURISM. 13. A PERUSAL OF THE AFOREMENTIONED SECTION SHOWS THAT THE ASSESSEE FULFILS ALL THE NECESSARY CONDITIONS. THE ONLY BONE OF CONTENTION IS THE RULES WHICH REFER TO THE PRESCRIBED AUTHORITY AS DI RECTOR GENERAL IN THE DIRECTORATE GENERAL OF TOURISM, GOVERNMENT OF INDIA . 14. IN THE LIGHT OF THE AFOREMENTIONED PROVISIONS AND T HE RULE, WE FIND THAT THE RELEVANT CERTIFICATE HAS BEEN ISSUED BY THE REGIONAL DIRECTOR OF TOURISM ON THE RECOMMENDATION OF THE RE GIONAL CLASSIFICATION COMMITTEE. 15. THE ONLY REASON FOR THE DENIAL OF THE CLAIM OF DEDU CTION IS THAT THE CERTIFICATE IS NOT ISSUED BY THE DIRECTOR GENER AL; WE DO NOT FIND ANY LOGIC IN THIS CLAIM OF THE REVENUE AUTHORITIES. ITA NO.2228 & 2229/AHD/2011 . A.Y. 2007-0 8 & 2008-09 6 16. IN OUR UNDERSTANDING IN EVERY GOVERNMENT DEPARTMENT POWERS ARE DELEGATED AND ON SUCH DELEGATION, THE INFERIOR AUTHORITY EXECUTES THE POWERS OF THE SUPERIOR AUTHORITY. WE FIND THAT THE REGIONAL DIRECTOR OF TOURISM HAVE ISSUED THE CERTIFICATE ON THE RECOMMENDATION OF THE REGIONAL CLASSIFICATION COMMITTEE WHICH HAS BEEN EXAMINED BY THE DEPARTMENT OF TOURISM, GOVERNMENT OF INDIA. IN OUR CONSIDERED OPINION, THIS CERTIFICATE FULFILLS THE NECESSARY CO NDITIONS. 17. ANOTHER ARGUMENT OF THE LD. D.R. IS THAT IN THE CER TIFICATE THERE IS NO REFERENCE TO SECTION 80IB(7(B) OF THE ACT. THIS ARGUMENT OF THE LD. D.R. DOES NOT HOLD ANY WATER BECAUSE THERE IS NO MA NDATE IN THE I.T. ACT NOR IN THE I.T. RULES WHEREIN ANY PERFORMA HAS BEEN GIVEN IN WHICH THE ASSESSEE HAS TO TAKE THE CERTIFICATE. THE DEPAR TMENT OF TOURISM WHILE ISSUING SUCH CERTIFICATE IS IMMUNE TO THE PRO VISIONS OF THE INCOME TAX ACT. 18. CONSIDERING THE FACTS IN TOTALITY, THE ACTION OF TH E REVENUE AUTHORITIES IS NOT SUPPORTED BY THE PROVISION OF TH E LAW NOR BY THE INCOME TAX RULES. WE, ACCORDINGLY, SET ASIDE THE FI NDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO ALLOW THE CLAIM OF DE DUCTION U/S. 80IB(7)(B) OF THE ACT. 19. IN THE RESULT, BOTH THESE APPEALS OF THE ASSESSEE A RE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 20- 06 - 2016. SD/- SD/- (RAJPAL YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY