Mrs. (Late) Raj Dulari Jethi through L/h Mr. Pradeep Kumar Jethi, Nainital V. ITO, Nainital

ITA 3433/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65657 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 11-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 05-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRISCILLA SINGSIT
• Assessee Lawyers: ASHWANI TANEJA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH F FF F : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NOS SS S. .. .3433/DEL/2011 & 3434/DEL/2011 3433/DEL/2011 & 3434/DEL/2011 3433/DEL/2011 & 3434/DEL/2011 3433/DEL/2011 & 3434/DEL/2011 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEARS SS S : : : : 2006 2006 2006 2006- -- -07 & 2007 07 & 2007 07 & 2007 07 & 2007- -- -08 0808 08 MRS. (LATE) RAJ DULARI J MRS. (LATE) RAJ DULARI J MRS. (LATE) RAJ DULARI J MRS. (LATE) RAJ DULARI JETHI, ETHI, ETHI, ETHI, THROUGH L/H SHRI PRADEEP THROUGH L/H SHRI PRADEEP THROUGH L/H SHRI PRADEEP THROUGH L/H SHRI PRADEEP KUMAR JETHI, KUMAR JETHI, KUMAR JETHI, KUMAR JETHI, C/O HOTEL SHIVRAJ, C/O HOTEL SHIVRAJ, C/O HOTEL SHIVRAJ, C/O HOTEL SHIVRAJ, THE MALL, THE MALL, THE MALL, THE MALL, NAINITAL. NAINITAL. NAINITAL. NAINITAL. PAN : AFSPJ8063M. PAN : AFSPJ8063M. PAN : AFSPJ8063M. PAN : AFSPJ8063M. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, NAINITAL. NAINITAL. NAINITAL. NAINITAL. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI TANEJA, FCA. RESPONDENT BY : SHRI PRISCILLA SINGSIT, SR.DR. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THESE APPEALS FILED BY THE ASSESSEE ARE DIRECTED A GAINST THE ORDER DATED 14 TH FEBRUARY, 2011 OF LEARNED CIT(A)-II, DEHRADUN FOR THE AY 2006-07 & 2007-08. 2. THE ONLY COMMON GROUND RAISED IN THESE APPEALS B Y THE ASSESSEE IS AGAINST THE DISALLOWANCE OF DEDUCTION U NDER SECTION 80IC OF THE INCOME-TAX ACT, 1961. 3. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT THE ASSESSING OFFICER DISALLOWED THE D EDUCTION UNDER SECTION 80IC ON THE GROUND THAT THE ASSESSEES HOTE L IS NOT ENVIRONMENT FRIENDLY AND DOES NOT QUALIFY FOR DEDUC TION UNDER SECTION 80IC. THAT, ON APPEAL, THE LEARNED CIT(A) TOOK THE VIEW THAT THE ASSESSEE HAS FULFILLED THE REQUIREMENT OF PROMOTING ECO-TOURISM BUT, HE SUSTAINED THE DISALLOWANCE ON THE GROUND THAT TH E ASSESSEE HAS NOT ITA-3433 & 3434/DEL/2011 2 STARTED THE NEW HOTEL DURING THE YEAR UNDER CONSIDE RATION BUT, IT ONLY MADE SUBSTANTIAL EXPANSION. IT IS SUBMITTED BY THE LEARNED COUNSEL THAT THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE AS SESSEE BY THE DECISION OF ITAT IN THE CASE OF M/S ANCHAL HOTELS (P) LTD. I N ITA NOS.1800 & 1801/DEL/2010 AND 3637/DEL/2011. IN THE SAID CASE, THE ITAT, VIDE ORDER DATED 7 TH OCTOBER, 2011, HAS HELD THAT THE ASSESSEE WOULD BE ENTITLED TO CLAIM DEDUCTION UNDER SECTION 80IC EVEN ON SUBSTANTIAL EXPANSION. HE, THEREFORE, SUBMITTED THAT THE APPEA LS OF THE ASSESSEE SHOULD BE ALLOWED. 4. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDER OF THE ASSESSING OFFICER. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THE ASSESSING OFFICER DISALLOWED THE DEDUCTION UNDER SECTION 80IC ON THE GROUND THAT THE ACTIVITIES OF THE ASSESSEES HOTEL ARE NOT ENVI RONMENT FRIENDLY AND, THEREFORE, IT DOES NOT QUALIFY FOR DEDUCTION UNDER SECTION 80IC OF THE ACT. THE LEARNED CIT(A) DID NOT AGREE WITH THIS FI NDING OF THE ASSESSING OFFICER BUT, HE SUSTAINED THE DISALLOWANCE ON SOME OTHER GROUND. IT WOULD BE EVIDENT FROM THE FOLLOWING FINDING OF THE CIT(A):- 7. THE APPELLANT, AS STATED ABOVE, WOULD HAVE BEEN ALLOWED THE CLAIMED DEDUCTION ONLY IF IT WAS A NEW HOTEL WHICH IS THE PRIMARY CONDITION SPECIFIED IN CLAUSE (B) OF SUB SECTION (2) OF SECTION 80-IC WHICH MANDATES THAT TH E OPERATION OF THE HOTEL SPECIFIED IN THE FOURTEENTH SCHEDULE SHOULD HAVE BEGUN 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. THE HOTEL OF THE APPELLANT HAPPENS TO BE AN OLD HOTEL AND IN TER MS OF SUB-CLAUSE (II) OF CLAUSE (B) OF SUB-SECTION (2) OF SECTION 80- ITA-3433 & 3434/DEL/2011 3 IC IS NOT ENTITLED TO CLAIM THE DEDUCTION SPECIFIED U/S 80-IC. TO SUM UP, THE DISALLOWANCE MADE BY THE AO ON THE GROUND THAT THE HOTEL DOES NOT FULFILL THE REQUIREM ENTS OF PROMOTING ECO-TOURISM ETC. IS NOT BASED ON THE CORR ECT UNDERSTANDING OF WHAT ECO-TOURISM INCLUDING HOTELS CONNOTES AND THE SAME HAS NOW BEEN DECIDED BY THE HONBLE ITAT DELHI BENCH IN SHRI BIDHI CHAND SINGHA L VS. ITO IN ITA NO.3419/DEL/2009 WHICH IS RESPECTFULLY F OLLOWED AND THE DEDUCTION WOULD HAVE CERTAINLY BEEN DIRECTE D TO BE ALLOWED HAD THE HOTEL BEEN ESTABLISHED OR HAD IT COMMENCED ITS OPERATIONS BEGINNING FROM THE PREVIOU S YEAR RELEVANT TO A.Y. 2004-05 AND UNDERTAKEN SUBSTA NTIAL EXPANSION BETWEEN 07.01.03 AND 31.03.2012. THE DEDUCTION IS, THEREFORE, NOT ALLOWED BECAUSE THE HO TEL HAD ALREADY COMMENCED ITS OPERATIONS BEFORE THE F.Y. 20 03-04. THE DEDUCTION IS THUS AVAILABLE ONLY TO A NEW HOTEL . THE DISALLOWANCE MADE BY THE AO IS, THEREFORE, UPHELD A LBEIT ON A SEPARATE GROUND THAT THE HOTEL WAS AN OLD ONE. THE HOTEL HAS THOUGH UNDERTAKEN SUBSTANTIAL EXPANSION D URING THE SPECIFIED PERIOD BUT IT HAS NOT COMMENCED ITS OPERATIONS IN F.Y. 2003-04. THE CONDITIONS ARE CUMULATIVE. 6. THE REVENUE IS NOT IN APPEAL AGAINST THE ORDER O F THE LEARNED CIT(A). THEREFORE, THE LIMITED ISSUE IN THESE APPE ALS BEFORE US WHICH REMAINS TO BE CONSIDERED IS WHETHER THE SUSTENANCE OF DISALLOWANCE BY THE CIT(A) ON THE GROUND THAT THE ASSESSEE DID NOT COMMENCE ITS OPERATIONS IN THE PERIOD SPECIFIED UNDER SECTION 80 IC IS JUSTIFIED. THE LEARNED CIT(A) HAS CATEGORICALLY RECORDED A FINDING THAT THE ASSESSEE HAD UNDERTAKEN SUBSTANTIAL EXPANSION DURING THE AFO RESAID PERIOD. HOWEVER, IN HIS OPINION, THE ASSESSEE IS ENTITLED T O DEDUCTION UNDER SECTION 80IC ONLY IF THE ASSESSEE COMMENCES ITS OPE RATIONS DURING THE ITA-3433 & 3434/DEL/2011 4 SPECIFIED PERIOD AND NOT WHEN THERE WAS A SUBSTANTI AL EXPANSION DURING THE SPECIFIED PERIOD. WE FIND THAT THE ITAT DELHI BENCH HAS CONSIDERED THE IDENTICAL ISSUE IN THE CASE OF M/S A NCHAL HOTELS (P) LTD. (SUPRA), WHEREIN THE ITAT HELD AS UNDER:- 4. WE HAVE CONSIDERED THE PROVISION IN SO FAR AS I T IS APPLICABLE TO THE FACTS OF THE CASE. IN TERMS OF S ECTION 80- IC(2)(B), THE DEDUCTION IS ADMISSIBLE IF THE HOTEL COMMENCES THE OPERATION WITHIN THE PERIOD MENTIONED IN THE STATUTE. IT IS ALSO ADMISSIBLE IF THE HOTEL CO MMENCES ANY OPERATION AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD MENTIONED IN THE STATUTE. IT DOES APPEA R TO US THAT THE WORDS COMMENCES ANY OPERATION ARE RATHER REDUNDANT FOR THE REASON THAT THE DEDUCTION IN SUCH A CASE IS ADMISSIBLE ON THE BASIS OF LANGUAGE EARLIER EMPL OYED IN THIS PROVISION. THEREFORE, IN THE CASE OF AN EXIST ING HOTEL, THE DEDUCTION WILL BE ADMISSIBLE IF THE SUBSTANTIAL EXPANSION TAKES PLACE WITHIN THE PRESCRIBED PERIOD. THE INTERPRETATION SOUGHT TO BE PLACED BY THE LD.DR ON THIS PROVISION WILL LEAD TO A SITUATION WHERE THE DEDUCT ION UNDER THE SECOND PART OF THE PROVISION WOULD BE ADMISSIBL E ONLY IF COMMENCEMENT OF OPERATION AND SUBSTANTIAL EXPANSION TAKES PLACE WITHIN THE STATUTORY PERIOD. THE DEDUC TION WHERE THE HOTEL COMMENCES ANY OPERATION WITHIN THE STATUTORY PERIOD IS ADMISSIBLE IN ANY CASE ON THE B ASIS OF THE LANGUAGE IN THE EARLIER PART, THEREFORE, THE SE COND PART CAN ONLY BE A CASE WHERE SUBSTANTIAL EXPANSION TAKE S PLACE DURING THE STATUTORY PERIOD. ACCORDINGLY, IT IS HELD THAT THE CONDITION MENTIONED IN THE AFORESAID PROVI SION STANDS SATISFIED IN THIS CASE. ITA-3433 & 3434/DEL/2011 5 7. NO CONTRARY DECISION IS BROUGHT TO OUR KNOWLEDGE . IN VIEW OF THE ABOVE, WE, RESPECTFULLY FOLLOWING THE ABOVE DECISIO N OF ITAT, HOLD THAT THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION UNDER S ECTION 80IC OF THE ACT IF THE SUBSTANTIAL EXPANSION HAD TAKEN PLACE WI THIN THE PRESCRIBED PERIOD. IN VIEW OF THE ABOVE, WE DIRECT THE ASSESS ING OFFICER TO ALLOW DEDUCTION UNDER SECTION 80IC TO THE ASSESSEE. 8. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE A LLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 12 TH OCTOBER, 2012. SD/- SD/- ( (( (CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 12.10.2012 VK. COPY FORWARDED TO: - 1. APPELLANT : MRS. (LATE) RAJ DULARI JETHI, MRS. (LATE) RAJ DULARI JETHI, MRS. (LATE) RAJ DULARI JETHI, MRS. (LATE) RAJ DULARI JETHI, THROUGH L/H SHRI PRADEEP KUMAR JETHI, THROUGH L/H SHRI PRADEEP KUMAR JETHI, THROUGH L/H SHRI PRADEEP KUMAR JETHI, THROUGH L/H SHRI PRADEEP KUMAR JETHI, C/O HOTEL SHIVRAJ, THE MALL, NAINITAL. C/O HOTEL SHIVRAJ, THE MALL, NAINITAL. C/O HOTEL SHIVRAJ, THE MALL, NAINITAL. C/O HOTEL SHIVRAJ, THE MALL, NAINITAL. 2. RESPONDENT : INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, NAINITAL. NAINITAL. NAINITAL. NAINITAL. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR