Mrs. Raj Dulari Jethi, Nainital V. ITO, Nainital

ITA 3817/DEL/2008

• Counselvise Citation: 381720114 RSA 2008
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 20-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 30-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: ASHWANI TANEJA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER & SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NO.3817/DEL/2008 ASSESSMENT YEAR: 2005-06 MRS. RAJ DULARI JETHI, VS. INCOME TAX OFFICER, C/O HOTEL SHIVRAJ, NAINITAL. THE MALL, NAINITAL. AFSPJ8063M (APPELLANT) (RESPONDENT) APPELLANT BY : SH. ASHWANI TANEJA, FCA & SH. T ARUN KUMAR, ADV. RESPONDENT BY : MS. Y. KAKKAR, SR. DR DATE OF HEARING: 20.12.2011 DATE OF PRONOUNCEMENT: 20.12.2011 ORDER PER K.G. BANSAL, A.M. THE ONLY SUBSTANTIVE GROUND TAKEN BY THE ASSESSEE IN THIS APPEAL IS THAT ON THE FACTS AND IN THE CIRCUMS TANCES OF THE CASE, THE LD. CIT(A) ERRED IN DENYING THE CLAIM OF DEDUCTION OF RS. 6,03,228/- MADE BY THE ASSESSEE U/S 80IC OF THE INCOME TAX ACT, 1961. IT IS ALSO MENTIONED THAT SHE HAS C OMPLIED WITH THE CONDITIONS MENTIONED IN THE AFORESAID PROV ISION AND FOURTEENTH SCHEDULE OF THE ACT. ITA NO. 3817/D/08 2 2. THE FINDING OF THE ASSESSING OFFICER IN THE MATT ER IS TWO FOLD, I.E. (I) IT IS NOT PROVED THAT THE HOTEL CO MMENCED BUSINESS BETWEEN 07.01.2003 AND 31.03.2012, AND (II ) THE ASSESSEE IS RUNNING A SIMPLE HOTEL WITHOUT TAKING A NY STEPS FOR PROTECTION OF ENVIRONMENT. THE LD. CIT(A) HAS CONFIRMED THE FINDINGS OF THE AO BY MENTIONING THAT ENTRY NUM BER 15 IN PART C OF SCHEDULE XIV USES THE WORDS HOTELS, RESOR TS, SPA, ENTERTAINMENT/AMUSEMENT PARK. THESE WORDS HAVE BEE N PLACED IN JUXTA POSITION WITH THE WORD ECO-TOURISM . THEREFORE, WITHOUT TAKING ANY STEPS FOR PRESERVING ECOLOGICAL BALANCE, THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 80IC. 3. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. IT IS THE COMMON POSIT ION THAT THE ASSESSEE WAS REQUIRED TO STATE ITS CASE REGARDI NG SATISFACTION OF VARIOUS PRE-CONDITIONS FOR GRANT OF THE DEDUCTION. NO REPLY HAS BEEN FURNISHED IN SO FAR A S THE DATE ON WHICH IT STARTED OPERATION OF THE HOTEL. THEREF ORE, NO CONCLUSION DRAWN IN RESPECT OF THE FACT WHETHER THE HOTEL COMMENCED BUSINESS ON ANY DAY BETWEEN 07.01.2003 AN D 31.03.2012. HOWEVER, IT IS ALSO THE ADMITTED POSIT ION THAT SUBSTANTIAL EXPANSION OF THE HOTEL TOOK PLACE IN TH IS YEAR. THE CASE OF THE LD. COUNSEL IS THAT IRRESPECTIVE OF THE DATE OF ITA NO. 3817/D/08 3 SETTING UP OF THE BUSINESS, THE ASSESSEE IS ENTITLE D TO DEDUCTION AS IT HAS UNDERTAKEN SUBSTANTIAL EXPANSIO N IN THIS YEAR. IN THIS CONNECTION, OUR ATTENTION HAS BEEN D RAWN TOWARDS CLAUSE (V) OF SUB-SECTION (8) OF SECTION 80 IC, WHICH DEFINES THE TERM INITIAL ASSESSMENT YEAR TO MEAN THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE UNDERTAKING OR THE ENTERPRISE BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS, OR COMMENCES OPERATION OR COMPLETES SUBSTANTIAL EXPANSION. HIS CASE IS THAT THE INITIAL YEAR AS PER THIS DEFINITION WILL BE THE CURRENT YEA R. FURTHER, IN SO FAR AS THE FINDING IN RESPECT OF ECO-TOURISM IS CONCERNED, THE MATTER STANDS COVERED BY THE ORDER OF A BENCH OF DELHI TRIBUNAL IN THE CASE OF SH. BIDHI CHAND SINGHAL VS. ITO IN ITA NO. 3419(DEL)2009 FOR THE A.Y. 2006-07 DATED 04.11. 2010. IN PARAGRAPH NUMBER 6 THE MATTER HAS BEEN DECIDED IN F AVOUR OF THE ASSESSEE. THIS PARAGRAPH READS AS UNDER: - 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 BEEN THE CONTENTION OF THE ASSESSEE THAT HIS HOTEL IS APPROVED BY THE GOVERNMENT. THE HOTEL CANNOT BE APPROVED BY THE GOVERNMENT WITHOUT OBTAINING NO ITA NO. 3817/D/08 4 OBJECTION FROM THE POLLUTION DEPARTMENT. THERE IS NO MATERIAL ON RECORD TO SHOW THAT POLLUTION DEPARTMENT OF THE GOVERNMENT HAS NOT GIVEN 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 REPRODUCED ABOVE, THEN, ECO-TOURISM INTER ALIA INCLUDE HOTELS. NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT ECO-TOURISM STATUS HAS BEEN GRANTED TO ANY OTHER HOTEL AND WHICH STATUS ASSESSEE DOES NOT HAVE. IF THE LOGIC APPLIED BY THE AO AND CIT(A) IS MADE APPLICABLE, THEN THE HOTELS WHICH ARE NOT HAVING THE ALLEGED ECO-TOURISM STATUS CANNOT BE HELD TO BE ENTITLED TO DEDUCTION U/S 80IC. IF NONE OF THE HOTELS CAN BE GRANTED DEDUCTION U/S 80IC, THEN, THE ITEM NO. 15 OF PART C OF THE FOURTEENTH SCHEDULE WILL BE REDUNDANT. THEREFORE, IN OUR OPINION, IN THE ABSENCE 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 HIMACHAL 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 HOTEL ELIGIBLE FOR DEDUCTION U/S 80IC AS PER PROVISIONS OF ITA NO. 3817/D/08 5 SECTION 80IC. THEREFORE, WE ALLOW THE CLAIM OF DEDUCTION U/S 80IC TO THE ASSESSEE AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 3.1 ON THE OTHER HAND, THE CASE OF THE LD. SR. DR I S THAT THE WORDS USED IN CLAUSE (B) OF SUB-SECTION (2) OF SECT ION 80IC ARE WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PRODUC E ANY ARTICLE OR THING, SPECIFIED IN SCHEDULE XIV OR COM MENCES ANY OPERATION SPECIFIED IN THAT SCHEDULE, OR WHICH MANU FACTURES OR PRODUCES ANY ARTICLE OR THING, SPECIFIED IN THE SCH EDULE XIV OR COMMENCES ANY OPERATION SPECIFIED IN THAT SCHEDULE AND (EMPHASIS SUPPLIED) UNDERTAKES SUBSTANTIAL EXPANSIO N DURING THE PERIOD 07.01.2003 TO 31.03.2012. HER CASE IS T HAT BOTH THE CONDITIONS REGARDING THE PERIOD OF COMMENCING O PERATION AND THE PERIOD OF SUBSTANTIAL EXPANSION ARE REQUIRE D TO BE SPECIFIED. 3.2 HAVING CONSIDERED THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE MATTER REGARDING SATISFACTION OF THE CONDITION MENTIONED IN SECTION 80IC HAS TO BE EXAMINED AGAIN BY THE AO IN THE LIGHT OF THE VARIOUS STATUTORY PROVISIONS MENTIONED ABOVE. IN SO FAR AS INTERPRETATION OF THE TERM HO TELS IS CONCERNED, THE MATTER STANDS COVERED BY THE DECISIO N OF THE TRIBUNAL IN THE CASE OF SH. BIDHI CHAND SINGHAL (SU PRA), WHICH IS PRECEDENT OF BINDING NATURE, THEREFORE, HAS TO B E FOLLOWED ITA NO. 3817/D/08 6 BY US. THUS, THE VARIOUS ARGUMENTS REGARDING UNDER TAKING OF STEPS FOR PRESERVING ECOLOGICAL BALANCE ARE NOT ACC EPTED. 3.3 IN THE RESULT, THE MATTER IS RESTORED TO THE FI LE OF THE AO FOR CONSIDERING WHETHER CONDITION MENTIONED IN SUB- SECTION (2) OF SECTION 80IC ARE COMPLIED OR NOT. 4. IN THE RESULT, THE APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (R.P. TOLANI) (K.G. BANS AL) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED: 20.12.2011 *KAVITA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR ITA NO. 3817/D/08 7 ITA NO. 3817/D/08 8 ITA NO. 3817/D/08 9 ITA NO. 3817/D/08 10 ITA NO. 3817/D/08 11 ITA NO. 3817/D/08 12