The Dy. CIT, Circle-3(1)(2), Ahmedabad V. M/s. Raysons Residency Pvt. Ltd., Ahmedabad

ITA 3214/AHD/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3077 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 09-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Capital expenditure

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 3214/AHD/2015 ( ASSESSMENT YEAR: 2012-13) DCIT, CIRCLE-3(1)(2) AHMEDABAD / VS. M//S RAYSONS RESIDENCY PVT. LTD. 15, NATIONAL PLAZA C.G. ROAD, AHMEDABAD - 380009 ./ ./ PAN/GIR NO. : AAE CR1 565 Q ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : O.P. SHARMA, CIT DR / RESPONDENT BY : S.N. SOPARKAR, ADVOCATE DATE OF HEARING 18/02/2019 !'# / DATE OF PRONOUNCEMENT 28/02/2019 / O R D E R PER MAHAVIR PRASAD - JM: THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAIN ST THE ORDER OF LD. CIT(A) DATED 24/08/2015 ARISING FROM A SSESSMENT ORDER DATED 10/02/2015. REVENUE HAS TAKEN FOLLOWING GROU ND THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING TH E DISALLOWANCE OF RS. 6,26,69,610/- MADE 35AD(5)(AA) OF THE ACT. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING T HE FACTS THAT THE INDIAN TOURISM, MINISTRY OF TOURISM, GOVT. OF INDIA HAD GIVEN ITA NO.3214/AHD/2015 [DCIT VS. RAYSONS RESIDENCY PVT. LTD.] A.Y. 2012-13 - 2 - APPROVAL WITH THE CONDITION THAT THE ASSESSEE SHOUL D APPLY SEPARATELY TO AVAIL THE CONCESSION UNDER THE ACT, H OWEVER THE ASSESSEE FAILED TO APPLY SEPARATELY FOR THE PURPOSE OF DEDUCTION UNDER THE ACT. FACT EMANATES FROM ASSESSMENT ORDER . (1)THAT ASSESSEE HAD MADE APPLICATION TO INDIA TOU RISM MUMBAI WITH A FEES OF RS. 8,000/- BY DEMAND DRAFT. INDIA TOURISM, MUMBAI, A PART OF MINISTRY OF TOURISM, GOVT. OF IN DIA VIDE ITS LETTER NO. ITM(750)(1111)/2010 DATED 02/08/2010 HA D SUBMITTED THAT THE DEMAND DRAFT SUBMITTED BY THE ASSESSEE OF RS. 8,000/- IS RETURNED FOR NECESSARY AMENDMENT AS SAME WAS PAYAB LE AT NEW DELHI, INSTEAD OF MUMBAI. (2) CHECK LIST OF FACILITIES AND SERVICES WERE NO T SUBMITTED. (3) COPY OF LAND USED/COMMENCING SERVICE IS NOT C ERTIFIED. (4) IN ITS PARA-2 OF LETTER NO. ITM(750)(AP)(723)/ 2010 DATED 30/08/2010 ADDRESSED TO THE ASSESSEE, INDIA TOURIS M HAD CLARIFIED THAT THOUGH PERMISSION FOR 3 STAR HOTEL IS GRANTED, THE APPROVAL DOES NOT CONSTITUTE AN APPROVAL FOR FISCA L CONCESSION UNDER THE INCOME TAX ACT. FOR FISCAL CONCESSION, IF ANY, UNDER THE I.T. ACT SEPARATE AND SPECIFIC APPROVAL IS TO BE SOUGHT AND APPLIED FOR AFTER HOTEL STARTS FUNCTIONING. RELEV ANT PORTION OF THE SAME IS AS UNDER:- 2. THIS APPROVAL DOES NOT CONSTITUTE APPROVAL UND ER THE INCOME TAX ACT, 1961. FOR FISCAL CONCESSIONS, IF ANY, UN DER THE INCOME TAX ACT, SEPARATE AND SPECIFIC APPROVAL WILL HAVE TO BE SOUGHT AND APPLIED FOR AFTER THE HOTEL STARTS FUNCTIONING . FURTHER IN PARA-3, IT WAS MENTIONED THAT THE BENEF IT UNDER THE SPECIFIED SECTION OF I.T. ACT WILL APPROVE FROM THE DATE ON WHICH THE HOTEL APPROVED AT THE PROJECT STAGE STARTS FUNCTION ING SUBJECT TO HOTEL EXPRESSING ITS INTENTION TO DEPARTMENT TO AVA IL THE SAME IN WRITING. RELEVANT PORTION OF THE SAME IS REPRODUCED AS UNDER:- IT MAY BE NOTED THAT THE BENEFITS UNDER THE SPECIF IED SANCTIONS OF THE INCOME TAX ACT, IF ANY, WILL ACCRUE FROM THE DA TE ON WHICH THE HOTEL APPROVED AT THE PROJECT STAGE STARTS FUNCTION ING SUBJECT TO THE HOTEL EXPRESSING ITS INTENTION TO THE DEPARTMENT OF TOURISM, GOVT. OF INDIA, C-1 HUTMENTS, DALHOUSIE ROAD, NEW DELHI 1100 11 TO AVAIL THE SAME IN WRITING. FURTHER, THE ASSESSEE HAD NOT FURNISHED FOLLOWING LICENSES:- 1. COMPLETION CERTIFICATE 2. OCCUPATION CERTIFICATE 3. TREATED POTABLE WATER LICENSE 4. WEIGHTS AND MEASURES CERTIFICATE ITA NO.3214/AHD/2015 [DCIT VS. RAYSONS RESIDENCY PVT. LTD.] A.Y. 2012-13 - 3 - 5. HYGIENE AND SANITARY CERTIFICATE 6. SEWAGE LICENSE 7. STRUCTURAL SAFETY CERTIFICATE IN VIEW OF ABOVE, IT IS CLEAR THAT THE INDIAN TOURI SM, THE MINISTRY OF TOURISM, GOVT. OF INDIA HAD GIVEN ITS APPROVAL WITH THE CONDITION THAT THE ASSESSEE SHOULD APPLY SEPARATELY TO AVAIL THE CONCESSION UNDER INCOME TAX ACT. THE ASSESSEE HAD NOT APPLIED SEPARATELY NOR FURNISHED ANY EVIDENCE FROM WHICH IT CAN BE ESTABLI SHED THAT A SEPARATE APPLICATION IS BEING MADE BY THE ASSESSEE TO AVAIL THE CONCESSION UNDER THE I.T. ACT. FURTHER THE ASSESSEE HAD NOT OBTAINED ALL KIND OF LICENSES WHICH ARE NECESSARY FOR RUNNIN G OF ANY HOTEL BUSINESS. THEREFORE, IT IS VERY MUCH CLEAR THAT TH E ASSESSEE HAD NOT FULFILLED ALL CONDITIONS WHICH WERE SPECIFIED TO AV AIL DEDUCTION U/S. 35AD OF THE I.T. ACT AND FINALLY MADE DISALLOWANCE OF RS. 6,26,69,610/-. 2. THEREAFTER AGAINST THE DISALLOWANCE OF RS. 6,26, 69,610/- MADE UNDER SECTION 35AD(5)(AA) OF THE ACT ASSESSEE PREFE RRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO ALLOWED THE APPEAL OF THE ASSESSEE ON THE GROUND THAT NO SPECIFIC PERMISS ION IS LAID DOWN IN SECTION 35AD AND/OR RELEVANT INCOME TAX RULES TH E ACTION OF AO SEEMS TO BE UNJUSTIFIED IN DENYING DEDUCTION UNDER SECTION 35AD AND HELD THAT ASSESSEE HAD COMPLETED NECESSARY FORM ALITIES IN TERMS OF OBTAINING LICENSES FROM DIFFERENT AUTHORITIES WE RE OBTAINED BY THE ASSESSEE. 3. NOW REVENUE HAS COME BEFORE US AGAINST THE ORDER OF THE LD. CIT(A), WE HAVE GONE THROUGH THE RELEVANT RECORD AN D AMOUNT THE QUESTION BEFORE US IS WHETHER ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 35AD(5)(AA) OF THE ACT OR NOT AND IN ORDER TO AVAIL THE BENEFITS OF SEC. 35AD(5)(AA) OF THE ACT ASSESSEE HA S TO FULFILL THE CONDITIONS BEING EXPENDITURE INCURRED PRIOR TO COMM ENCEMENT OF ITS ITA NO.3214/AHD/2015 [DCIT VS. RAYSONS RESIDENCY PVT. LTD.] A.Y. 2012-13 - 4 - OPERATION AND THE AMOUNT IS CAPITALIZE IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE ON THE OPERATION. AS PER PROVISIONS O F SECTION, ANY CAPITAL EXPENDITURE INCURRED BY THE ASSESSEE PRIOR TO COMMENCEMENT OF OPERATION OF THE NEW UNIT SHALL BE ALLOWED AS DE DUCTION IN THE PREVIOUS YEAR IN WHICH THE ASSESSEE COMMENCES THE O PERATION OF HOTEL BUSINESS. SEC. 35AD(5)(AA) IS REGARDING DEDU CTION IN RESPECT OF EXPENDITURE ON SPECIFIED BUSINESS:- ON OR AFTER 1 ST DAY OF APRIL, 2010, WHERE THE SPECIFIED BUSINESS IS IN THE NATURE OF BUILDING AND OPERATING A NEW HOTEL OF TWO STAR OR ABOVE CATEGORY AS CLASSIFIED BY THE CENTRAL GOVERNMENT. IN RESPECT OF ITS CONTENT ION ASSESSEE SUBMITTED COPY OF PERMISSION GRANTED BY THE MINISTR Y OF TOURISM LETTER DATED 30/08/2010 WHEREIN APPROVAL OF THREE S TAR HOTEL HAS BEEN GRANTED BY THE MINISTRY AND ASSESSEE HAS FILED BUILDING HOUSE PERMISSION ISSUED BY THE MUNICIPAL AUTHORITY DATED 18/10/2011 FOR GRANTING THE PERMISSION OF HOTEL AND ASSESSEE SUBMI TTED DETAILS WITH THE AO FOR FOLLOWING DOCUMENTS ALONG WITH COPIES OF ASSESSEE SUBMITTED LETTER DATED 09/02/2015 ALONG WITH FOLLOW ING DOCUMENTS COPY OF: 1. EATING HOUSE LICENSE 2. LICENSE FOR KEEPING OF LODGING HOUSE 3. PROFESSIONAL TAX REGISTRATION CERTIFICATE 4. B.U. PERMISSION 5. PERMIT ORDER UNDER GUJARAT TAX ON LUXURIES 6. CONSENT TO OPERATE (POLLUTION CONTROL) 7. KITCHEN WASTE REMOVAL AGREEMENT 8. LIFT LICENSE 9. LICENSE UNDER FOOD SAFETY AND STANDARD ACT, 2006 10. CERTIFICATE FOR FIRE SAFETY MEASURE 11. CHECKLIST AND DETAILS SUBMITTED WITH TOURISM DE PARTMENT ITA NO.3214/AHD/2015 [DCIT VS. RAYSONS RESIDENCY PVT. LTD.] A.Y. 2012-13 - 5 - 12. APPROVAL OF PROPOSED THREE STAR HOTEL PROJECT 4. THE CIT(A) IN OUR VIEW, HAS RIGHTLY COME TO THE CONCLUSION IN FAVOUR OF THE ASSESSEE. THUS WE DISMISS THE APPEAL OF THE REVENUE. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. SD/- SD/- (PRADIP KUMAR KEDIA) (MAHAVIR P RASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 28/02/2019 TANMAY TRUE COPY !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 28/02/ 2019