M/s Shirkar Hotel Pvt. Ltd., Lucknow V. ACIT, Lucknow

ITA 360/LKW/2011

• Counselvise Citation: 36023714 RSA 2011
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 20-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Procedural lapse; Competent authority; Benefit of exemption
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI B. R. JAIN , ACCOUNTANT MEMBER ITA NO. 360/LKW/2011 ASSESSMENT YEAR: 2007 - 08 M/S SHIRKAR HOTEL PVT. LTD. 6, SHAHNAJAF ROAD LUCKN OW V. ACIT RANGE II LUCKNOW PAN: AAFCS4475D (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. AMIT SHUKLA, ADVOCATE RESPONDENT BY: SHRI. VIVEK GUPTA, D.R. DATE OF HEARING: 28.11.2011 DATE OF PRONOUNCEMENT: 13.12.2011 O R D E R PER S UNIL KUMAR YAD AV : THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) ON VARIOUS GROUNDS RELATED TO THE ISSUE OF REJECTION OF CLAIM OF DEDUCTION AMOUNTING TO ` 31,20,148 UNDER SECTION 80IB(7)(A) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED A S THE ACT). 2. DURING THE PENDENCY OF THE APPEAL, THE ASSESSEE MOVED AN APPLICATION SEEKING ADMISSION OF FOLLOWING ADDITIONAL GROUNDS: - 5) BECAUSE WHOLLY WITHOUT PREJUDICE TO THE GROUNDS RAISED AT SL. NO. 1, 2 & 3, THAT ITS CLAIM FOR DEDUCTION UNDER SECTION 80IB SHOULD HAVE BEEN ALLOWED AS PER CLAUSE (A) OF SUB SECTION (7), : - 2 - : OF THE SAID SECTION WHERE BY APPELLANT IS ENTITLED FOR CLAIM FOR DEDUCTION @ OF 50% OF THE PROFIT DERIVED FROM THE HOTEL BUSINESS BY THE AUTHORITIES BELOW, THE APPELLANT OTHERWISE ALSO FU LFILLS THE REQUISITE CONDITIONS GIVEN UNDER SUB CLAUSE (B) OF SUB SECTION (7) OF SECTION 80IB WHEREBY DEDUCTION SHOULD HAVE BEEN ALLOWED @ 30% OF THE PROFIT AS THE REQUISITE CERTIFICATE/APPROVAL WAS DULY GIVEN BY THE PRESCRIBED AUTHORITY UNDER RULE - 18BBC(1 ) OF THE INCOME TAX RULES - 1962, SINCE INITIAL YEAR. 6) BECAUSE THE APPELLANT HAS BEEN ISSUED CERTIFICATE/APPROVAL BY DIRECTOR GENERAL, TOURISM, WHO IS A 'PRESCRIBED AUTHORITY' UNDER THE ACT, VIDE ORDER DATED 11.11.2002, WHEREIN THE APPELLANT WAS DULY RECOG NIZED TO SEEK, CLAIM FOR EXEMPTION/BENEFITS UNDER SECTION 80HHD AND 80IB (7)(B) OF THE INCOME TAX ACT, 1961 W.E.F. DATE OF COMMENCEMENT OF THE HOTEL BUSINESS I.E. 03.04.2000 AND SUCH CERTIFICATE/ORDER WAS DULY AVAILABLE IN THE RECORDS OF THE DEPARTMENT, TH E ASSESSING OFFICER SHOULD HAVE ALLOWED THE DEDUCTION UNDER SECTION 80IB(7)(B) @ 30% OF THE PROFIT DERIVED FROM HOTEL BUSINESS. 7) BECAUSE THE LD. CIT (APPEAL) AS WELL AS ASSESSING OFFICER HAS ERRED IN LAW AND ON FACTS IN DENYING THE WHOLE OF DEDUCTION CLA IMED BY THE APPELLANT UNDER SECTION 80IB ON THE GROUND THAT CLAIM FOR DEDUCTION OF 50% AS PER SECTION 80IB(7)(A) CAN NOT BE GIVEN AS THE REQUISITE APPROVAL WAS NOT FULFILLED WITHOUT APPRECIATING THAT APPELLANT'S CLAIM FOR DEDUCTION SHOULD HAVE BEEN ALLOWED @ 30% UNDER CLAUSE (B) OF SUB SECTION (7) OF SECTION 80IB, SUO - MOTO AS THE REQUISITE : - 3 - : CONDITION AND CERTIFICATE/APPROVAL BY THE PRESCRIBED AUTHORITY WERE DULY AVAILABLE ON RECORD. 3. IN SUPPORT OF THE REQUEST FOR ADMISSION OF THE ADDITIONAL GROUNDS, THE L D. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO CERTAIN FACTS THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RUNNING AND OPERATING OF HOTEL AT LUCKNOW IN WHICH IT WAS ENTITLED FOR EXEMPTION NOT ONLY UNDER CLAUSE (A) OF SUB - SECTION (7) OF SECTION 80IB OF THE ACT BUT ALSO UNDER CLAUSE (B) OF SUB - SECTION (7) OF SECTION 80IB OF THE ACT. THE EXEMPTION UNDER SECTION 80IB(7)(B) WAS GRANTED BY THE PRESCRIBED AUTHORITY VIDE THEIR LETTER DATED 11.11.20 0 2 AND THE SAME WAS FILED BEFORE THE ASSESSING OFFICER, BUT IT WAS NOT TAKEN INTO ACCOUNT BY THE ASSESSING OFFICER FOR GRANTING DEDUCTION UNDER SECTION 80IB(7)(B) OF THE ACT. HE HAS SIMPLY ADJUDICATED THE CLAIM RAISED BY THE ASSESSEE UNDER SECTION 80IB(7)(A) OF THE ACT AND DISALLOWED THE SAME FOR THE REASON T HAT THE ASSESSEE COULD NOT OBTAIN APPROVAL UNDER SECTION 80IB(7)(A) OF THE ACT FROM THE PRESCRIBED AUTHORITY AS THE MATTER WAS SUB JUDICE WITH THE DIRECTOR GENERAL OF INCOME - TAX (EXEMPTION) AND THE DIRECTOR GENERAL OF TOURISM. THE LD. COUNSEL FOR THE ASSE SSEE FURTHER CONTENDED THAT THE CLAIM OF THE ASSESSEE UNDER SECTION 80IB(7)(B) OF THE ACT MAY KINDLY BE EXAMINED BY ADMITTING THE ADDITIONAL GROUNDS AS ITS ADJUDICATION DO ES NO T REQUIRE ANY INVESTIGATION OR APPRECIATION OF FACTS. 4. THE LD. COUNSEL FOR THE AS SESSEE HAS ALSO PLACED RELIANCE UPON VARIOUS JUDGMENTS OF VARIOUS HIGH COURTS IN SUPPORT OF HIS CONTENTION THAT THE DUTY ALWAYS CAST ON THE INCOME TAX OFFICER TO APPLY RELEVANT PROVISIONS OF THE ACT FOR THE PURPOSE OF DETERMINING THE TRUE FIGURE OF THE ASS ESSEES TAXABLE INCOME AND CONSEQUENTIAL TAX LIABILITY. THE RELIANCE WAS ALSO PLACED ON THE JUDGMENTS OF THE HON'BLE APEX COURT IN THE CASE OF JUTE CORPORATION : - 4 - : INDIA LTD. V. CIT [1991] 187 ITR 688 AND NATIONAL THERMAL POWER CORPORATION LTD. V. CIT [1998] 229 ITR 383 WHEREIN IT HAS BEEN HELD THAT AN APPELLATE AUTHORITY HAVE ALL THE POWERS WHICH THE ORIGINAL AUTHORITY MAY HAVE IN DECIDING THE QUESTION BEFORE IT SUBJECT TO RESTRICTIONS OR LIMITATIONS, IF ANY, PRESCRIBED BY THE STATUTORY PROVISIONS AND IN THE ABSENCE OF ANY STATUTORY PROVISION, THE A PPELLATE A UTHORITY IS VESTED WITH ALL THE PLENARY POWERS WHICH THE SUBORDINATE AUTHORITY MAY HAVE IN THE MATTER. THEREFORE, THE ADDITIONAL GROUNDS BE ADMITTED AND BE ADJUDICATED ON MERIT S . 5. THE LD. D.R. HAS STRONGLY OPPOSED THE ADMISSION OF ADDITIONAL GROUNDS FOR THE REASON THAT THE CLAIM OF THE ASSESSEE UNDER SECTION 80IB(7)(B) OF THE ACT WAS NEITHER RAISED BEFORE THE ASSESSING OFFICER N OR THE LD. CIT(A). HOWEVER, THE ASSESSEE FOR THE FIRST TIME HAS RAISED THIS ISS UE BEFORE THE TRIBUNAL WHICH REQUIRES PROPER VERIFICATION OF FACTS . T HEREFORE, THE ADDITIONAL GROUNDS CANNOT BE ADMITTED. 6. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERSONAL OF THE ORDERS OF THE AUTHORITIES BELOW AND THE DOCUMENTS PLACED ON RE CORD, WE FIND THAT UNDISPUTEDLY THE ASSESSEE HAS RAISED A CLAIM FOR DEDUCTION UNDER SECTION 80IB(7)(A) OF THE ACT BEFORE THE ASSESSING OFFICER. IT IS ALSO A FACT THAT THE ASSESSEE HAS FILED APPROVAL FOR EXEMPTION UNDER SECTION 80IB(7)(B) OF THE ACT OBTAIN ED FROM THE DEPARTMENT OF TOURISM, BUT NO CLAIM IN THIS REGARD WAS RAISED. THE REASON FOR NO T RAISING THIS CLAIM UNDER CLAUSE (B) WAS OBVIOUS AS THE ASSESSEE HAS RAISED CLAIM FOR DEDUCTION UNDER SECTION 80IB(7)(A) OF THE ACT. THE ASSESSING OFFICER HAS DE NIED THE CLAIM OF DEDUCTION UNDER SECTION 80IB(7)(A) OF THE ACT ON THE GROUND THAT THE ASSESSEE COULD NOT OBTAIN APPROVAL FROM THE COMPETENT AUTHORITY. T HE ASSESSING OFFICER DID NOT EXAMINE THE CLAIM OF THE ASSESSEE UNDER SECTION 80IB(7)(B) OF THE ACT THO UGH THE APPROVAL OF THE COMPETENT AUTHORITY WAS : - 5 - : PLACED ON RECORD. IT HAS BEEN REPEATEDLY HELD BY VARIOUS HIGH COURTS THAT THE DUTY CAST ON THE INCOME TAX OFFICER TO APPLY THE RELEVANT PROVISION OF THE INCOME - TAX ACT FOR THE PURPOSE OF DETERMINING THE TRUE FIGURE OF THE ASSESSEES TAXABLE INCOME AND THE CONSEQUENTIAL TAX LIABILITY. IN THE CASE OF KEDARNATH JUTE MFG. CO. LTD. V. CIT, CALCUTTA, 82 ITR 363, THEIR LORDSHIPS OF HON'BLE CALCUTTA HIGH COURT HAVE HELD THAT WHETHER THE ASSESSEE IS ENTITLED TO A PAR TICULAR DEDUCTION OR NOT WILL DEPEND ON THE PROVISION OF LAW RELATING THERETO AND NOT ON THE VIEW WHICH THE ASSESSEE MIGHT TAKE OF HIS RIGHTS, NOR CAN THE EXISTENCE OR ABSENCE OF ENTRIES IN HIS BOOKS OF ACCOUNT BE DECISIVE OR CONCLUSIVE IN THE MATTER. 7. IN THE CASE OF CIT V. MAHALAXMI SUGAR MILLS CO. LTD., 160 ITR 920 THEIR LORDSHIPS OF THE HON'BLE APEX COURT HA VE HELD THAT THERE IS A DUTY CAST ON THE INCOME TAX OFFICER TO APPLY THE RELEVANT PROVISIONS OF THE INDIAN INCOME TAX ACT FOR THE PURPOSE OF DET E RMI NING THE TRUE FIGURE OF THE ASSESSEES TAXABLE INCOME AND THE CONSEQUENTIAL TAX LIABILITY. IF THE ASSESSEE FAILS TO CLAIM BENEFIT OF SET - OFF CANNOT RELIEVE THE INCOME TAX OFFICER OF HIS DUTY TO APPLY SECTION 24 IN AN APPROPRIATE CASE. WE HAVE ALSO CAREFU LLY GONE THROUGH THE JUDGMENTS OF THE HON'BLE APEX COURT IN THE CASE S OF JUTE CORPORATION INDIA LTD. V. CIT (SUPRA) AND NATIONAL THERMAL POWER CORPORATION LTD. V. CIT (SUPRA) IN WHICH IT IS CATEGORICALLY HELD THAT AN APPELLATE AUTHORITY HAVE ALL THE POWERS WHICH THE ORIGINAL AUTHORITY MAY HAVE IN DECIDING THE QUESTION SUBJECT TO CERTAIN RESTRICTIONS OR LIMITATIONS. THE APPELLATE AUTHORITY CAN ALSO ADMIT NEW GROUNDS HAVING SATISFIED THAT FOR THE BONA FIDE REASONS IT COULD NOT HAVE BEEN AGITATED BEFORE THE L OWER AUTHORITIES. 8. IN THE INSTANCE CASE THOUGH THE ASSESSEE HAS FILED APPROVAL OF EXEMPTION UNDER SECTION 80IB(7)(B) OF THE ACT, BUT THE ASSESSEE CONFINED ITSELF ONLY WITH THE CLAIM UNDER SECTION 80IB(7)(A) OF THE ACT . THEREFORE, : - 6 - : WE ARE OF THE VIEW THAT IT WAS THE DUTY OF THE ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE ASSESSEE UNDER SECTION 80IB(7)(B) OF THE ACT IN THE LIGHT OF THE DOCUMENTS FILED BEFORE HIM. THE RE FORE, WE ARE OF THE VIEW THAT THE ADDITIONAL GROUNDS SHOULD BE ADMITTED AND BE ADJUDICATED UPON. ACCORDINGLY WE ADMIT THE ADDITIONAL GROUNDS AND WOULD ADJUD I CATE IT ALONG WITH THE MAIN GROUNDS OF APPEAL. 9. THE FACTS IN NUTSHELL WITH REGARD TO THE CONTROVERSY INVOLVED IN THIS APPEAL ARE THAT THE ASSESSEE - COMPANY IS ENGAGED IN THE BUSINESS OF RUNN ING HOTEL IN THE NAME AND STYLE LA PLACE PARK INN. THE ASSESSEE CLAIMED DEDUCTION OF ` 31,20,198 UNDER SECTION 80IB(7)(A) OF THE ACT WHICH IS 50% OF THE BUSINESS PROFIT OF ` 62,40,395. THE CLAIM OF DEDUCTION WAS DENIED BY THE ASSESSING OFFICER ON THE GRO UND THAT THE ASSESSEE COULD NOT OBTAIN APPROVAL FROM THE PRESCRIBED AUTHORITIES AS ENVISAGED IN SECTION 80IB(7)(A) OF THE ACT READ WITH RULE 18BBC OF THE INCOME - TAX RULE (HEREINAFTER CALLED AS THE RULE). 10. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT( A) BUT DID NOT FIND FAVOUR WITH HIM. 11. NOW THE ASSESSEE IS IN APPEAL BEFORE TH E TRIBUNAL WITH THE SUBMISSION THAT THE ASSESSEE HAS ALREADY APPLIED FOR APPROVAL FOR EXEMPTION UNDER SECTION 80IB(7)(B ) OF THE ACT AND THE MATTER IS SUB J UDICE WITH THE DIRECTOR G ENERAL, TOURISM . THE DIRECTOR GENERAL O F INCOME TAX (EXEMPTION) HAS ALREADY RECOMMENDED FOR GRANT OF APPROVAL FOR EXEMPTION UNDER SECTION 80IB(7)(A) OF THE ACT TO THE ASSTT. DIRECTOR GENERAL (H&R). THE BENEFIT OF EXEMPTION UNDER SECTION 80IB(7)(A) OF THE ACT IS TO BE AVAILABLE W.E.F. FINANCIAL YEAR 2000 - 01 TO FINANCIAL YEAR 2009 - 1 0. THE APPROVAL OF THE PRESCRIBED AUTHORITY IS DELAYED ON ACCOUNT OF PROCEDURAL LAPSES BUT IT HAS TO BE GIVEN TO THE ASSESSEE AS IT HAS FULFILLED ALL THE REQUISITE CONDITIONS. IT IS ONLY A MATTER OF TIME, THEREFORE, ON ACCOUNT OF : - 7 - : PROCEDURAL LAPSES THE ASSESSEE SHOULD NOT BE DENIED EXEMPTION UNDER SECTION 80IB(7)(A) OF THE ACT. 12. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO ARGUED IN ALTERNATIVE THAT IF EXEMPTION UNDER SECTION 80IB( 7)(A) CANNOT BE GRANTED, BENEFIT OF EXEMPTION UNDER SECTION 80IB(7)(B) MAY BE GRANTED AS THE ASSESSEE HAS ALREADY PLACED CERTIFICATE OF APPROVAL OF THE PRESCRIBED AUTHORITY UNDER THIS SECTION BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PRO CEEDINGS. THE COPY OF THE APPROVAL IS PLACED ON RECORD AT PAGE 6 OF THE COMPILATION OF THE ASSESSEE. 13. THE LD. D.R. STRONGLY OPPOSED THE CONTENTIONS OF THE ASSESSEE WITH THE SUBMISSION THAT DEDUCTION UNDER SECTION 80IB(7)(A) OF THE ACT CANNOT BE GRANTED AS THE ASSESSEE HAS NOT OBTAINED APPROVAL FROM THE PRESCRIBED AUTHORITY EVEN TILL DATE. MERE SUBMISSION OF PROPOSAL TO THE ASSTT. DIRECTOR GENERAL (H&R) BY THE DIRECTOR GENERAL O F INCOME TAX (EXEMPTION) FOR GRANT OF APPROVAL FOR EXEMPTION UNDER SECTION 80IB( 7)(A) OF THE ACT DOES NOT MEAN THAT THE APPROVAL HAS BEEN GRANTED TO THE ASSESSEE. THEREFORE, IN THE ABSENCE OF APPROVAL BY THE PRESCRIBED AUTHORITY, DEDUCTION UNDER SECTION 80IB(7)(A) OF THE ACT CANNOT BE GRANTED. 14. WITH REGARD TO THE ALTERNATIVE PLEA OF T HE LD. COUNSEL FOR THE ASSESSEE IS CONCERNED, THE LD. D.R. HAS SUBMITTED THAT THE ASSESSEE HAS NOT MADE ANY CLAIM FOR BENEFIT OF EXEMPTION UNDER SECTION 80IB(7)(B) OF THE ACT BEFORE THE ASSESSING OFFICER . THEREFORE, THE CLAIM OF THE ASSESSEE UNDER SECTION 80IB(7)(B) OF THE ACT CANNOT BE ENTERTAINED BY THE SECOND APPELLATE AUTHORITY. IN SUPPORT OF HIS CONTENTION, THE LD. D.R. HAS PLACED RELIANCE UPON THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF GOETZE (INDIA) LTD. V. CIT [2006] 284 ITR 323 (SC). : - 8 - : 15. I N REBUTTAL, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. JAI PARABOLIC SPRINGS LTD. [2008] 306 ITR 42 AFTER EXAMINING THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF GOETZE (INDIA) LTD. V. CIT (SU PRA) HAS HELD THAT THERE IS NO PRO HIBITION ON THE POWERS OF THE TRIBUNAL TO ENTERTAIN ADDITIONAL GROUND WHICH ACCORDING TO THE TRIBUNAL AROSE IN THE MATTER FOR THE JUST DECISION OF THE CASE. WHILE DEALING WITH THE ISSUE, THEIR LORDSHIPS HAVE ALSO EXAMINED THE JUDGMENTS OF THE HON'BLE APEX COURT IN THE CASES OF JUTE CORPORATION INDIA LTD. V. CIT AND NATIONAL THERMAL POWER CORPORATION LTD. V. CIT (SUPRA). 16. THE LD. D.R. HAS ALSO INVITED OUR ATTENTION TO THE PROVISIONS OF SECTION S 80IB(7)(A) AND 80IB(7)(B) OF T HE ACT WITH THE SUBMISSION THAT THE APPROVAL FOR EXEMPTION UNDER SECTION S 80IB(7)(A) AND 80IB(7)(B) OF THE ACT ARE TO BE ALLOWED TO THE HOTELS CONSIDERING THE LOCALITIES WHERE THEY ARE SITUATED AND THE ASSESSEE IS ENTITLED TO RAISE ONLY ONE CLAIM AT A TIME . SINCE THE ASSESSEE HAS RAISED A CLAIM FOR DEDUCTION UNDER SECTION 80IB(7)(A) OF THE ACT , ITS ALTERNATIVE CLAIM FOR DEDUCTION UNDER SECTION 80IB(7)(B) OF THE ACT CANNOT BE ENTERTAINED AS THE REQUIREMENT FOR BOTH THE CLAUSES ARE ENTIRELY DIFFERENT. 17. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW AND THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT UNDISPUTEDLY THE ASSESSEE HAS RAISED A CLAIM FOR DEDUCTION UNDER SECTION 80IB(7)(A) OF THE ACT AND THIS CLAIM WAS DENIED FOR THE REASON THAT THE ASSESSEE COULD NOT FURNISH APPROVAL FROM THE PRESCRIBED AUTHORITY . T HOUGH THE ASSESSEE HAS FILED VARIOUS DOCUMENTARY EVIDENCE WITH REGARD TO THE RECOMMENDATION BY THE DIRECTOR GENERAL O F INCOME TAX (EXEMPTION) FOR GRANT OF APPROVAL FOR EXEMPTION UNDER SECTION 80IB(7)(A) OF THE ACT TO THE ASSTT. DIRECTOR GENERAL (H&R), YET IN FACT THE APPROVAL HAS NOT BEEN : - 9 - : GRANTED EVEN TILL DATE. THEREFORE, PRIMA FACIE THE ASSESSEE COULD NOT FULFILL THE REQUISITE CONDITIONS FOR CLAIMING DEDUCTION UNDER SECTION 80IB(7)(A) OF THE ACT. 18. SO FAR AS THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IB(7)(B) OF THE ACT IS CONCERNED, WE FIND THAT THOUGH THE ASSESSEE HAS FILED A CERTIFICATE OF APPROVAL OF THE DIRECTOR GENERAL OF TOURISM BEFOR E THE ASSESSING OFFICER FOR EXEMPTION UNDER SECTION 80IB(7)(B) OF THE ACT , BUT THE ASSESSEE DID NOT RAISE ANY CLAIM UNDER THIS PROVISION. IT HAS BEEN HELD BY THE VARIOUS HIGH COURTS AND ALSO THE APEX COURT THAT THE DUTY CAST ON THE INCOME TAX OFFICER TO D ETERMINE THE INCOME OF THE ASSESSEE AS PER THE PROVISIONS OF LAW. SINCE THE APPROVAL OF THE PRESCRIBED AUTHORITY IS ON RECORD BEFORE THE ASSESSING OFFICER, HE SHOULD HAVE EXAMINED THE CLAIM OF DEDUCTION UNDER SECTION 80IB(7)(B) OF THE ACT IN T HE LIGHT OF RELEVANT EVIDENCE, BUT HE DID NOT DO SO. 19. WE HAVE ALSO CAREFULLY EXAMINED THE PROVISIONS OF SECTION S 80IB(7)(A) AND 80IB(7)(B) OF THE ACT AND WE FIND THAT THE PERCENTAGE OF DEDUCTION ALLOWABLE DEPENDS UPON THE LOCATION OF THE HOTEL. IF THE HOTEL IS LOCATED IN A HILLY AREA OR A RURAL AREA OR A PLACE OF PILGRIMAGE OR SUCH OTHER PLACE AS THE CENTRAL GOVERNMENT MAY , HAVING REGARD TO THE NEED FOR DEVELOPMENT OF INFRASTRUCTURE FOR T OURISM IN ANY PLACE AND OTHER RELEVANT CONSIDERATIONS, SPECIFY BY NOTIFICATION IN THE OFFICIAL GAZETTE AND SUCH HOTEL STARTS FUNCTIONING AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1 ST DAY OF APRIL, 1990 AND ENDING ON THE 31 ST DAY OF MARCH, 1994 OR BEGINNING ON THE 1 ST DAY OF APRIL, 1997 AND ENDING ON THE 31 ST DAY OF MARCH, 2001 , IT WOULD BE ENTITLED FOR DEDUCTION @ 50% OF THE PROFIT AND GAINS DERIVED FROM BUSINESS OF SUCH HOTEL FOR A PERIOD OF 10 CONSECUTIVE YEARS BEGINNING FROM THE INITIAL ASSESSMENT YEAR SUBJECT TO FULFILLMENT OF CERTAIN CONDITIONS. THE OTHER HOTELS WHICH ARE LOC ATED IN ANY OTHER PLACE OTHER THAN THOSE : - 10 - : MENTIONED IN CLAUSE (A) OF SUB - SECTION (7) OF SECTION 80IB OF THE ACT AND START ED ITS FUNCTIONING DURING THE PERIOD BEGINNING ON THE 1 ST DAY OF APRIL, 199 1 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 , IT WOULD BE ENTITLED FOR DEDUCTION @ 30% OF THE PROFIT AND GAINS DERIVED FROM THE BUSINESS OF SUCH HOTEL FOR 10 CONSECUTIVE YEARS BEGINNING FROM THE INITIAL ASSESSMENT YEAR SUBJECT TO TH E APPROVAL OF THE PRESCRIBED AUTHORITY. 20. IN BOTH THE CASES THE PRESCRIBED AUTHORITIES ARE DIFFERENT. UNDER RULE 18BBC OF THE RULE, THE PRESCRIBED AUTHORITIES ARE DEFINED AND FOR CLAUSE (A) OF SUB - SECTION (7) OF SECTION 80IB OF THE ACT, THE PRESCRIBED AUTHO RITY SHALL BE THE DIRECTOR GENERAL INCOME TAX (EXEMPTION) WHO SHALL GRANT APPROVAL ON THE CONCURRENCE OF THE DIRECTOR GENERAL IN THE DIRECTORATE GENERAL OF TOURISM, GOVERNMENT OF INDIA. WHEREAS FOR CLAUSE (B) OF SUB - SECTION (7) OF SECTION 80IB OF THE ACT, THE PRESCRIBED AUTHORITY SHALL BE THE DIRECTOR GENERAL IN THE DIRECTORATE GENERAL OF TOURISM, GOVERNMENT OF INDIA. THEREFORE, FOR GRANT OF APPROVAL FOR CLAUSE (B) OF SUB - SECTION (7) OF SECTION 80IB OF THE ACT , THERE WILL BE NO ROLE OF THE DIRECTOR GENERA L INCOME TAX (EXEMPTION). FOR THE SAKE OF REFERENCE, WE EXTRACT SUB - SECTION (7) OF SECTION 80IB OF THE ACT AS UNDER: - (7) THE AMOUNT OF DEDUCTION IN THE CASE OF ANY HOTEL SHALL BE (A) FIFTY PER CENT OF THE PROFITS AND GAINS DERIVED FROM THE BUSINESS OF SUCH HOTEL FOR A PERIOD OF TEN CONSECUTIVE YEARS BEGINNING FROM THE INITIAL ASSESSMENT YEAR AS IS LOCATED IN A HILLY AREA OR A RURAL AREA OR A PLACE OF PILGRIMAGE OR SUCH OTHER PLACE AS THE CENTRAL GOVERNMENT MAY, HAVING REGARD TO THE NEED FOR DEVELOPMENT OF INFRASTRUCTURE FOR T OURISM IN ANY PLACE AND OTHER RELEVANT CONSIDERATIONS, SPECIFY BY NOTIFICATION IN THE OFFICIAL GAZETTE AND SUCH HOTEL STARTS FUNCTIONING AT ANY TIME DURING THE : - 11 - : PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 1990 AND ENDING ON THE 31ST DA Y OF MARCH, 1994 OR BEGINNING ON TH E 1ST DAY OF APRIL, 1997 AND ENDING ON THE 31ST DAY OF MARCH, 2001: PRO VIDED THAT NOTHING CONTAINED IN THIS CLAUSE SHALL APPLY TO A HOTEL LOCATED AT A PLACE WITHIN THE MUNICIPAL JURISDICTION (WHETHER KNOWN AS A MUNICIPALI TY, MUNICIPAL CORPORATION, NOTIFIED AREA COMMITTEE OR A CANTONMENT BOARD OR BY ANY OTHER NAME) OF CALCUTTA, CHENNAI, DELHI OR MUMBAI, WHICH HAS STARTED OR STARTS FUNCTIONING ON OR AFTER TH E 1ST DAY OF APRIL, 1997 AND BEFORE THE 31ST DAY OF MARCH, 2001: PRO VIDED FURTHER THAT THE SAID HOTEL IS APPROVED BY THE PRESCRIBED A UTHORITY FOR THE PURPOSE OF THIS CLAUSE IN ACCORDANCE WITH THE RULES MADE UNDER THIS ACT AND WHERE THE SAID HOTEL IS APPROVED BY THE PRESCRIBED AUTHORITY BEFORE THE 31ST DAY OF MARCH, 1992, S HALL BE D EEMED TO HAVE BEEN APPROVED BY THE PRESCRIBED AUTHORITY FOR THE PUR POSE OF THIS SECTION IN RELATION TO THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 1991; (B) THIRTY PER CENT OF THE PROFITS AND GAINS DERIVED FROM THE BUSINESS OF S U CH HOT EL AS IS LOCATED IN ANY PLACE OTHER THAN THOSE MENTIONED IN SUB - CLAUSE (A) FOR A PERIOD OF TEN CONSECUTIVE YEARS BEGINNING FROM THE INITIAL ASSESSMENT YEAR IF SUCH HOTEL HAS STARTED OR STARTS FUNCTION ING AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL 1991 AND ENDING ON THE 31ST DAY OF MARCH, 1995 OR BEGINNING ON THE 1ST DAY OF APRIL, 1997 AND ENDING ON THE 31ST DAY OF MARCH, 2001: PROVIDED THAT NOTHING CONTAINED IN THIS CLAUSE SHALL APPLY TO A HOTEL LOCATED AT A PLACE WITHIN THE MUNICIPAL JURISDICTION : - 12 - : (WHETHER KNOWN AS A MUNICIPALITY, MUNICIPAL CORPORATION, NOTIFIED AREA COMMITTEE; TOWN AREA COMMITTEE OR A CANTONMENT BOARD OR BY ANY OTHER NAME) OF CALCUTTA, CHENNAI, DELHI OR MUMBAI, WHICH HAS STARTED OR STARTS FUNCTIONING ON OR AFTER THE 1S T DAY OF APRIL, 1997 AND BEFORE THE 31ST DAY OF MARCH, 2001 21. FROM THE BARE READING OF THE AFORESAID CLAUSES (A) AND (B) OF SUB - SECTION (7) OF SECTION 80IB, WE FIND THAT THE PERCENTAGE OF DEDUCTIONS IS DIFFERENT DEPENDING UPON THE AREA WHERE THE HOTEL IS SI TUATED . THEREFORE, IT CANNOT BE SAID THAT IF DEDUCTION UNDER CLAUSE (A) IS NOT ALLOWED IT SHOULD BE ALLOWED UNDER CLAUSE (B). BOTH TYPES OF HOTELS ARE LOCATED IN DIFFERENT PLACES. THERE F ORE, VERIFICATION IS REQUIRED BY THE AUTHORITIES CONCERNED BEFORE A LLOWING ANY DEDUCTION. IN THE INSTANT CASE , APPROV AL UNDER SECTION 80IB(7)(B) HAS ALREADY BEEN OBTAINED BY THE ASSESSEE FROM THE DIRECTOR GENERAL OF TOURISM BUT THE CLAIM UNDER THIS CLAUSE I.E. CLAUSE (B) HAS NOT BEEN ADJUDICATED UPON BY THE ASSESSING OFF ICER. BUT THESE FACTS WERE NOT TAKEN IN ACCOUNT BY THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) WHILE DEALING WITH THE ISSUE. IT IS ALSO STRANGE TO NOTE THAT ONCE THE ASSESSEE HAS OBTAINED APPROVAL UNDER SECTION 80IB(7)(B) OF THE ACT , HOW IT BECOME S E LIGIBLE FOR DEDUCTION UNDER SECTION 80IB(7)(A) OF THE ACT BECAUSE THE PERCENTAGES OF DEDUCTIONS ARE DIFFERENT DEPEND ING UPON THE LOCATION OF THE HOTELS. 22. DURING THE COURSE OF HEARING OF THE APPEAL, OUR ATTENTION WAS ALSO INVITED TO THE ORDER OF THE LD. CIT( A) IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006 - 07 IN WHICH THE LD. CIT(A) HAS ALLOWED DEDUCTION UNDER SECTION 80IB(7)(B) OF THE ACT @ 30% OF THE TOTAL PROFIT AFTER HOLDING THAT IF DEDUCTION UNDER SECTION 80IB(7)(A) OF THE ACT IS NOT ALLOWABLE ATLEAST D EDUCTION UNDER SECTION 80IB(7)(B) OF THE ACT BE ALLOWED TO THE ASSESSEE AS T HE ASSESSEE HAS GOT APPROVAL FROM THE PRESCRIBED AUTHORITY UNDER : - 13 - : SECTION 80IB(7)(B) OF THE ACT. THE ORDER OF THE LD. CIT(A) FOR ASSESSMENT YEAR 2006 - 07 IS NOT BEFORE US, THEREFORE , WE REFRAIN OURSELVES FROM MAKING ANY COMMENTS THEREON. WE ARE, HOWEVER, OF THE VIEW THAT UNDER THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, THIS ISSUE REQUIRES FRESH ADJUDICATION BY THE ASSESSING OFFICER IN THE LIGHT OF THE RELEVANT PROVISIONS OF THE ACT AND ALSO THE APPROVAL OBTAINED BY THE ASSESSEE FROM THE DIRECTOR GENERAL OF TOURISM FOR DEDUCTION UNDER SECTION 80IB(7)(B) OF THE ACT. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICE R WITH THE DIRECTION TO RE - ADJUDICATE THE ISSUE IN TERMS INDICATED ABOVE AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 23. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13.12.20 11. SD/ - SD/ - [B. R. JAIN ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13.12.2011 JJ: 0112 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR