ACIT, Shimla V. Sh. Raghunath Singh Thakur, Shimla

ITA 469/CHANDI/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60883 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-03-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 05-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Keywords: Depreciation
• Section: 143(3); 80IB; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NOS.152 & 469/CHD/2010 (ASSESSMENT YEARS : 2006-07 & 2007-08) THE A.C.I.T., VS. SH.RAGHUNATH SINGH THAKUR, CIRCLE SHIMLA. HOTEL MARINA, THE MALL, SHIMLA. PAN: ABOPT5057F AND ITA NO.1144/CHD/2010 (ASSESSMENT YEAR : 2008-09) SH.RAGHUNATH SINGH THAKUR, VS. THE D.C.I.T., HOTEL MARINA, THE MALL, CIRCLE SHIMLA. SHIMLA. (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI SALIL AGGARWAL & GAUTAM JAIN DEPARTMENT BY : SMT.JAISHREE SHARMA, DR DATE OF HEARING : 29.03.2012 DATE OF PRONOUNCEMENT : 22.06.2012 O R D E R PER SUSHMA CHOWLA, J.M, : OUT OF THREE APPEALS TWO APPEALS ARE BY THE REVENUE AGAINST THE SEPARATE ORDERS OF CIT (APPEALS), SHIMLA DATED 30.1 1.2009 AND 11.02.2011 RELATING TO ASSESSMENT YEARS 2006-07 AND 2007-08 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961. THE THIRD APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF THE CIT (APPEALS), SHIMLA DATED 04.11.2011 RELATING TO ASSE SSMENT YEAR 2008-09 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF TH E INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE REVENUE IN ITA NO. 152/CHD/2010 HAS RAISED T HE FOLLOWING GROUNDS: 1 ON THE FACTS AND CIRCUMSTANCES OF THE CASED, THE CI T(A) HAS ERRED IN HOLDING THAT THE PROFIT DERIVED FROM THE H OTEL RUN BY THE ASSESSEE ARE ELIGIBLE FOR DEDUCTION U/S 80IC OF RS. 52,12,30 4/-. 2 2. THE LD. CIT(A) HAS ERRED IN CONCLUDING THAT THE HO TEL RUN BY THE ASSESSEE QUALIFIES TO BE AN ECO- TOURISM PROJECT, A ND IS HENCE COVERED UNDER ITEM 15 OF SCHEDULE XIV OF THE INCOME-TAX ACT , 1961 BEEN AFTER HOLDING IN THE BODY OF THE ORDER THAT ECO TOURISM I S A MUCH BROADER AND DIFFERENT CONCEPT FROM THE CONCEPT OF TRADITIONAL T OURISM, AND IMPLYING THEREBY THAT THE STAND ALONE HOTEL, LOCATED IN THE MAIN MARKET PLACE IS NOT A PART OF AN ECO-TOURISM PROJECT. 3. THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE HOTEL RUN BY THE ASSESSEE QUALIFIES TO BE AN ECO-TOURISM PROJECT MER ELY ON THE BASIS OF THE ASSESSEES CONTENTION THAT IT IS FOLLOWING ECO-FRIE NDLY NORMS. 4. THE LD. CIT(A) HAS ERRED IN HOLDING THAT THAT SAID HOTEL IS AN ECO- TOURISM PROJECT, ON THE BASIS OF A NO OBJECTION CER TIFICATE FROM THE STATE GOVERNMENT EVEN THOUGH SUCH CERTIFICATE NOWHERE STA TES THAT THE HOTEL IS PART ON AN ECO-TOURISM PROJECT, AND DOES NOT EVEN C ERTIFY THAT THE HOTEL IS AN ECO-HOTEL AND IN FACT MERELY STATES THAT THE HOT EL COULD BE CONSIDERED TO BE A ECO-HOTEL SUBJECT TO FULFILLMENT OF ENVIRON MENT NORMS. 5. THE LD. CIT(A) HAS ERRED IN HOLDING THAT AN ECO-HOT EL AUTOMATICALLY QUALIFIES TO BE TERMED AS AN ECO-TOUR ISM PROJECT, WHEN THE MEANING OF ECO-HOTEL IS ENTIRELY DIFFERENT FROM THA T OF ECO-TOURISM. 6. THE ORDER OF THE LD. CIT(A) SUFFERS FROM GROSS INCO NSISTENCIES AND PERVERSITIES, AND IS HENCE LIABLE TO BE SET ASIDE. 7. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SE T ASIDE AND THAT OF THE AO RESTORED. THE REVENUE IN ITA NO. 152/CHD/2010 HAS RAISED THE FOLLOWING ADDITIONAL GROUNDS : 1 . LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION UNDER SE CTION 80IC TO THE ASSESSEE HOTEL IN SPITE OF THE PROVISIONS OF SE CTION 80IC(2)(B) WHICH REQUIRE THAT THE RELEVANT OPERATIONS SPECIFIED IN S CHEDULE FOURTEEN SHOULD COMMENCE ON OR AFTER 07.01.2003. 2. LD. CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE HOTEL IS ELIGIBLE FOR DEDUCTION U/S 80IC EVEN THOUGH A SEPARATE DEDUC TION FOR HOTELS IS PROVIDED IN SECTION 80IB(7) AND A SECOND DEDUCTION U/S 80IC COULD NOT BE INTENDED FOR THE SAME ACTIVITY. 3 . LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S 80 IC TO THE ASSESSEE HOTEL INSPITE OF THE FINDINGS OF THE AO T HAT NO SUBSTANTIAL EXPANSION WITHIN THE MEANING OF THE SAID SECTION HA D BEEN CARRIED OUT. THE REVENUE IN ITA NO. 469/CHD/2011 HAS RAISED THE FOLLOWING GROUNDS: 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE PROFIT DERIVED FROM T HE HOTEL RUN BY THE ASSESSEE ARE ELIGIBLE FOR DEDUCTION U/S 80IC OF RS. 77,32,590/- AS THE DEFINITION OF ECO-TOURISM INCLUDING HOTELS AS GIV EN IN SCHEDULE XIV AND THE CONCEPT OF ECO-TOURISDOE NOT JUSTIFY THE CLAIM OF THE ASSESSEE FOR CLAIMING DEDUCTION U/S 80IC. 2. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE AO RESTORED. 3 THE ASSESSEE IN ITA NO. 1144/CHD/2011 HAS RAISED T HE FOLLOWING GROUNDS: 1 THAT THE LD. CIT(A) SHIMLA HAS ERRED BOTH IN LAW AN D ON FACTS IN UPHOLDING DISALLOWANCE OF CLAIM OF DEDUCTION OF RS. 1,28,14,582/- U/S 80IC OF THE ACT. 1.1 THAT THE LD. CIT(A) WHILE UPHOLDING THE DISALLO WANCE OF CLAIM OF DEDUCTION HAS MISCONSTRUED THE STATUTORY PROVISIONS OF FACTS AND CIRCUMSTANCES OF THE APPELLANT AND HAS PROCEEDED ON ARBITRARY AND ERRONEOUS CONSIDERATION IN AS MUCH AS DISALLOWANCE OF DEDUCTION HAS BEEN CONFIRMED ON THE BASIS OF DICTIONARY MEANING O F ECO-TOURISM AND ECO-TOURISM POLICY OF HIMACHAL PRADESH. THE BASIS ADOPTED IS BASED ON MISAPPLICATION OF THE STATUTORY PROVISIONS CONTAINE D IN THE ACT AND THEREFORE, UNSUSTAINABLE. 1.2 THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT O NCE THE SERIAL NO. 15 PART C OF XIV SCHEDULE CLEARLY PROVIDED THAT ECO-TOURISM INCLUDED HOTELS THEN IT OUGHT TO HAVE HELD THAT ALL HOTELS ARE ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT IN VIEW OF THE JUDGME NT OF HON'BLE APEX COURT IN THE CASE OF CIT V. TAJ MAHAL REPORTED IN 8 2 ITR 544. 1.3 THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE DETAIL ED SUBMISSIONS AND EVIDENCE FURNISHED BY THE APPELLANT TO SUPPORT THE CLAIM OF DEDUCTION AND AS SUCH, DISALLOWANCE SO SUSTAINED IS OTHERWISE NOT IN ACCORDANCE WITH LAW. THE DISALLOWANCE CONFIRMED IS OTHERWISE BASED ON HIGHLY SUBJECTIVE, WHIMSICAL AND FANCIFUL CONSIDERA TION WHICH NEITHER IN LAW AND NOR ON FACT CAN BE VALIDLY MADE A BASIS TO DISALLOW THE LEGITIMATE CLAIM OF DEDUCTION AND THEREFORE, DISAL LOWANCE SO CONFIRMED IS ILLEGAL, UNTENABLE AND WHOLLY UNSUSTAINABLE. 1.4 THAT VARIOUS ADVERSE FINDINGS RECORDED BY THE LD. C IT(A) WHILE CONFIRMING THE DISALLOWANCE OF CLAIM OF DEDUCTION U /S 80IC OF THE ACT ARE BASED ON MISCONCEPTION OF THE FACTS AND CIRCUMS TANCES OF THE CASE OF THE APPELLANT AND ARE FACTUALLY INCORRECT AND LEGAL LY UNSUSTAINABLE. ITA NO. 3419/D/2009 FOR ASSESSMENT YEAR 2006-07, WH EREIN IDENTICAL CLAIM OF DEDUCTION HAD BEEN DISALLOWED. THE DISALLOWANCE THERE IN DISREGARD OF BINDING ORDERS IS NEITHER JUS TIFIED NOR VALID. IT IS THEREFORE, PRAYED THAT DISALLOWANCE OF CLAI M OF DEDUCTION U/S 80IC OF THE ACT OF RS. 1,28,14,582/- MAY KINDLY BE DELETED AND APPEAL OF THE APPELLANT BE ALLOWED. 3. ALL THE THREE APPEALS RELATING TO THE SAME ASSES SEE INVOLVING IDENTICAL ISSUE WERE HEARD TOGETHER AND ARE BEING D ISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. IN THE APPEALS RELATING TO ASSESSMENT YEARS 2006-07 AND 2007-08, THE REVENU E IS AGGRIEVED BY THE ORDER OF THE CIT (APPEALS) IN ALLOWING RELIEF T O THE ASSESSEE BY WAY OF HOLDING THE ASSESSEE ELIGIBLE FOR DEDUCTION UNDE R SECTION 80IC OF THE ACT. THE ASSESSEE IN ITA NO NO.1144/CHD/2011 IS AG GRIEVED BY THE 4 ORDER OF CIT (APPEALS) IN DENYING DEDUCTION UNDER S ECTION 80IC OF THE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE WAS ENGAGED IN THE BUSINESS OF RUNNING HOTEL IN THE NAME AND STYLE OF HOTEL COMBERMERE IN SHIMLA IN THE STATE OF HIMACHAL PRADESH. THE ASSES SEE DURING THE YEAR UNDER CONSIDERATION HAD EARNED NET PROFIT OF RS.52, 12,304/- FROM THE BUSINESS OF RUNNING THE HOTEL, AGAINST WHICH IT HAD CLAIMED DEDUCTION UNDER SECTION 80IC OF THE ACT FOR THE FIRST TIME IN ASSESSMENT YEAR 2006- 07. DURING THE COURSE OF ASSESSMENT PROCEEDINGS TH E ASSESSING OFFICER NOTED THE ASSESSEE TO HAVE CLAIMED DEDUCTION UNDER SECTION 80IC OF THE ACT IN RESPECT OF ITS PROFITS FROM HOTEL. THE ASSE SSING OFFICER SHOW CAUSED THE ASSESSEE TO EXPLAIN AS TO HOW THE HOTEL COULD BE SAID TO HAVE CONFIRMED TO THE CONCEPT OF ECO-TOURISM, AS ENSHRIN ED IN SCHEDULE-XIV OF THE ACT. THE REPLY OF THE ASSESSEE ALONGWITH RE LIANCE ON VARIOUS CASE LAWS IS REPRODUCED AT PAGE 4 OF THE ASSESSMENT ORDE R IN WHICH IT WAS STATED THAT THE ACTIVITY OF HOTEL IS SPECIFIED ACTI VITY IN SCHEDULE-XIV AND THE ACTIVITY OF ECO-TOURISM HAD BEEN INCLUSIVELY DE FINED TO SPECIFICALLY INCLUDE HOTELS. THE ASSESSING OFFICER REFERRED TO VARIOUS POPULAR MEANINGS OF WORK ECO-TOURISM AS REFERRED TO IN PA RA 8 AT PAGES 5 AND 6 OF THE ASSESSMENT ORDER. THE CONCLUSION OF THE ASS ESSING OFFICER AS PER PARA 9 IS THAT THUS, AS CAN BE SEEN, ECO-TOURISM IS A BROADER CONC EPT AND IS CERTAINLY DIFFERENT FROM THE CONCEPT OF TRADITI ONAL TOURISM. RUNNING A MULTI-STOREYED COMMERCIAL HOTEL IN THE MIDST OF A CITY CAN BY NO STRETCH OF IMAGINATION SAID TO BE AN ECO-TOURISM PR OJECT . THE ASSESSEES RELIANCE WAS ON A CERTIFICATE ISSUED BY DEPARTMENT OF TOURISM DATED 31.1.2007 UNDER WHICH THE APPROVAL TO OPERATE THE H OTEL AS ECO-HOTEL WOULD BE AVAILABLE SUBJECT TO FULFILLMENT OF NORMS PRESCRIBED BY THE H.P.STATE ENVIRONMENT PROTECTION & POLLUTION CONTRO L BOARD AND ALSO 5 THE VALIDITY OF THIS NO OBJECTION CERTIFICATE WAS S UBJECT TO THE APPROVAL OF THE HP STATE ENVIRONMENT AND POLLUTION CONTROL B OARD, SHIMLA. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID CER TIFICATE ONLY MENTIONED THAT THE HOTEL COMBERMERE COULD BE CONSID ERED AS A ECO-HOTEL SUBJECT TO FULFILLMENT OF NORMS AND THE SAID CERTIF ICATE WAS OF NO USE TO THE ASSESSEE IN THE PRESENT CONTEXT. THE PLEA OF T HE ASSESSEE THAT IT HAD UNDERTAKEN EXPANSION IN THE DEVELOPMENT OF HOTEL AN D IT COULD BE HELD ELIGIBLE FOR DEDUCTION 80IC OF THE ACT, WAS REJECTE D BY THE ASSESSING OFFICER AND THE CLAIM OF DEDUCTION UNDER SECTION 80 IC OF THE ACT WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THE ASSESSING O FFICER ALSO NOTED THAT THE ASSESSEE HAD NOT COMPLIED WITH THE STATUTO RY REQUIREMENT OF FILING THE AUDIT REPORT IN FROM NO.10CCB ALONGWITH RETURN OF INCOME WHICH WAS ONLY FILED ON 10.7.2007 I.E. AFTER 8 MONT HS OF FILING THE RETURN OF INCOME ON 31.10.2006. FURTHER IN THE RETURN OF INCOME THE ASSESSEE HAD NOT CLAIMED ANY DEDUCTION AS PER POINT NO.26 OF FORM NO.3CD SUBMITTED WITH THE RETURN OF INCOME. THE ASSESSING OFFICER ALSO TOOK NOTE OF THE FACT THAT FORM NO.3CB WHICH WAS FILED A LONGWITH RETURN OF INCOME ON 31.10.2006 WAS DATED 23.10.2006 AND THE O RIGINAL FORM NO.10CCB WAS ALSO DATED 23.10.2006. THE NON-FILING OF FORM NO.10CCB ALONGWITH THE RETURN OF INCOME, AS PER THE ASSESSING OFFICER RAISED A DOUBT AND THE SAME MAY HAVE BEEN OBTAINED AFTER FILING THE RETURN OF INCOME. ANOTHER OBSERVATION MADE BY THE ASSESSING OFFICER IN THE ALTERNATIVE WAS THAT THE ASSESSEE HAD FILED REVISED AUDIT REPORT IN FORM NO.10CCB DATED 24.11.2008, WHICH WAS FILED ON 27.11.2008. THE ASSESSEE VIDE ITS REPLY DATED 20.10.2008 FILED BEFO RE THE ASSESSING OFFICER IN PARA 4 HAD STATED THAT THE SUBSTANTIAL E XPANSION HAD BEEN UNDERTAKEN BY THE ASSESSEE DURING THE FINANCIAL YEA R 2004-05 RELEVANT TO ASSESSMENT YEAR 2005-06. IT WAS ALSO REITERATED BY THE ASSESSEE VIDE ITS SUBMISSION DATED 27.11.2008. THE ASSESSING OFFICER , HOWEVER, NOTED 6 THAT AS PER THE AUDIT REPORT IN FORM NO.10CCB FILED ON 10.7.2007, THE DATE OF SUBSTANTIAL EXPANSION WAS SHOWN AS ON 1.4.2 003 AS AGAINST 1.4.2004 CLAIMED IN THE SUBMISSION. ALSO THERE WAS A DIFFERENCE IN THE FIGURE OF VALUE OF INCREASE IN PLANT & MACHINERY I. E. IN FORM NO.10CCB IT WAS SHOWN AT RS.61,31,864/- AS AGAINST RS.62,35, 827/- SHOWN IN THE SUBMISSION FILED ON 20.10.2008. WHEN THE SAID DIFF ERENCES WERE POINTED OUT TO THE ASSESSEE, A REVISED FORM NO.10CCB DATED 24.11.2008 WAS SUBMITTED ON 27.11.2008. IN VIEW OF THE DIFFERING SUBMISSIONS/EXPLANATION FILED BY THE ASSESSEE, ASSE SSING OFFICER REJECTED THE REVISED AUDIT REPORT DATED 24.11.2008 AND HELD THAT THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80IC OF THE A CT WAS TO BE DENIED ON THIS GROUND. THE ASSESSING OFFICER WAS FURTHER OF THE VIEW THAT THE WORD HOTEL INCLUDED IN SCHEDULE-XIV WAS NECESSARI LY TO BE READ WITH WORD ECO-TOURISM. MORESO, SINCE SEPARATE DEDUCTI ON HAD BEEN GIVEN TO THE HOTELS IN THE ACT ITSELF UNDER SECTION 80IB (7) OF THE ACT. 5. THE NEXT ASPECT CONSIDERED BY THE ASSESSING OFFI CER WAS THE ISSUE OF SUBSTANTIAL EXPANSION. AS PER DEFINITION OF THE TERM SUBSTANTIAL EXPANSION IN SECTION 80IC(8)(IX), THE SAME MEANS I NCREASE IN THE INVESTMENT IN THE PLANT & MACHINERY BY ATLEAST 50% OF THE COST VALUE OF PLANT & MACHINERY, BEFORE TAKING DEPRECIATION IN AN Y YEAR, AS ON THE FIRST DATE OF THE PREVIOUS YEAR IN WHICH THE SUBSTANTIAL EXPANSION WAS UNDERTAKEN. THE ASSESSEE VIDE REPLY DATED 20.10.20 08 SUBMITTED THAT THE SUBSTANTIAL EXPANSION HAD BEEN UNDERTAKEN DURING TH E FINANCIAL YEAR 2004-05 AND THE COST VALUE OF THE PLANT & MACHINERY ON THE FIRST DATE OF THE FINANCIAL YEAR IN WHICH SUBSTANTIAL EXPANSION H AD BEEN UNDERTAKEN HAD TO BE SEEN WHICH AS PER THE ASSESSEE WAS IN ASS ESSMENT YEAR 2005-06. THE COST VALUE OF PLANT & MACHINERY AS ON 1.4.2004, AS PER THE ASSESSEE, WAS RS.98,18,269/- AND THE INCREASE IN THE INVESTME NT IN PLANT & 7 MACHINERY DURING THE FINANCIAL YEAR 2004-05 WAS RS. 62,35,827/-. AS PER THE ASSESSEE THE INCREASE IN THE INVESTMENT IN PLAN T & MACHINERY DURING THE FINANCIAL YEAR 2004-05 WAS 63.50% OF THE COST O F PLANT & MACHINERY AS ON 1.4.2004 AND THERE WAS COMPLIANCE TO THE PROV ISIONS OF THE ACT IN THIS REGARD. THE REPLY OF THE ASSESSEE IS REPRODUC ED BY THE ASSESSING OFFICER UNDER PARA 19 AT PAGE 11 OF THE ASSESSMENT ORDER. THE DETAILS OF ADDITION TO PLANT & MACHINERY DURING THE FINANCIAL YEAR 2004-05 ARE ENLISTED AT PAGE 12 OF THE ASSESSMENT ORDER. THE A SSESSING OFFICER OBSERVED THAT THE FURNITURE AND FITTINGS COULD NOT BE INCLUDED IN THE DEFINITION OF PLANT. REFERENCE WAS MADE TO NEW APP ENDIX-I READ WITH RULE 5 OF I.T. RULES WHEREIN DIFFERENT RATES OF DEP RECIATION WERE PROVIDED FOR FURNITURE AND FITTINGS INCLUDING ELECT RIC FITTINGS AND OTHER FITTINGS LIKE FAN ETC., AND IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE ELECTRIC FITTINGS WERE NOT TO BE INCLUDED IN TH E DEFINITION OF PLANT. SIMILARLY AC SYSTEMS WERE HELD TO BE PART OF ELECTR IC FITTINGS AND COULD NOT BE SAID TO BE PLANT & MACHINERY. THE AMOUNT SP ENT ON PURCHASE OF 45 COLOUR TVS AND ALSO ON MUSIC SYSTEM WERE HELD TO BE NON PLANT & MACHINERY IN ANY SENSE. FURTHER THE GYM EQUIPMENTS WERE HELD TO BE NON PLANT & MACHINERY. RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HON'BLE KERALA HIGH COURT IN ASIATIC SEA FOODS LTD. VS. CIT [229 ITR 172 (KER)], BY THE ASSESSING OFFICER. THE ASSE SSING OFFICER HELD ITEMS TOTALING RS.18,31,373/- I.E. COST OF FOUR SPL IT ACS INSTALLATION/COMMISSIONING CHARGES, COST OF 45 COLO UR TVS, COST OF MUSIC SYSTEM AND GYM EQUIPMENTS WERE TO BE EXCLUDED AND T HE SUBSTANTIAL EXPANSION AS DONE BY THE ASSESSEE WOULD BE REDUCED TO RS.44,04,454/- WHICH WAS LESS THAN 50% OF THE OPENING COST VALUE O F PLANT & MACHINERY OF RS.98,18,269/-. IT WAS THUS HELD THAT THE ASSES SEE HAD NOT COMPLIED WITH THE PROVISIONS OF SECTION 80IC OF THE ACT. FU RTHER ON ACCOUNT OF THE FOLLOWING REASON DEDUCTION CLAIMED UNDER SECTIO N 80IC OF THE ACT 8 WAS DENIED TO THE ASSESSEE BY THE ASSESSING OFFICER OBSERVING SUBJECT TO FULFILLMENT OF THE NORMS PRESCRIBED BY THE H.P. STA TE ENVIRONMENT PROTECTION & POLLUTION CONTROL BOARD AND ALSO THE V ALIDITY OF THIS NO OBJECTION CERTIFICATE IS SUBJECT TO THE APPROVAL OF THE HP STATE ENVIRONMENT AND POLLUTION CONTROL BOARD, SHIMLA . 6. THE CIT (APPEALS) IN THE APPEALS RELATING TO AS SESSMENT YEARS 2006-07 AND 2007-08 REFERRED TO THE DEFINITION OF E CO-TOURISM AS REPRODUCED AT PAGES 5 OF THE APPELLATE ORDER AND OB SERVED THAT IN ORDER TO QUALIFY FOR THE DEDUCTION UNDER SCHEDULE-XIV OF THE ACT, ECO-TOURISM HAD BEEN INCLUSIVELY DENIED TO INCLUDE HOTELS. FUR THER REFERENCE WAS MADE TO ITEM NO.15 PART-C OF SCHEDULE-XIV, WHICH US ES THE WORD INCLUDING. THE CIT (APPEALS) HELD THAT THE MAIN ENTRY WAS ECO-TOURISM WHICH WOULD INCLUDE A HOTEL, AMUSEMENT, SPA OR ROPE WAY. THE CIT (APPEALS) FURTHER HELD AS UNDER: IN RESPECT OF THE HILLY STATES OF HIMACHAL PRADESH, UTTARANCHAL AND SIKKIM, THE ACTIVITY OF ECO-TOURISM HAS BEEN SPECIFIED IN THIS SCHEDULE. EVIDENTLY, THE ACTIVITIES OF SETTING UP HOTELS, AMUSEMENT PARKS AND ROPEWAYS BY THEMSELVES, WHICH WOULD OBVIOUSLY ENTAIL DAMAGE TO THE ENVIRONMENT, COULD NOT HAVE BEEN SPECIFIED AS PRIOR ITY ACTIVITIES. BUT CONSIDERING THE POTENTIAL FOR DEVEL OPING TOURISM IN THESE STATES, THESE ACTIVITIES HAVE BEEN ALLOWED, AS LONG AS THEY ARE CARRIED OUT AS PART OF AN ECO- TOURISM PROJECT IN THESE STATES. IT IS TO BE APPRECIATED THAT PURE ECO- & TOURISM PROJECTS MAY NOT BE FINANC IALLY LUCRATIVE FOR INVESTORS, BUT WOULD BECOME PROFITABL E IF THEY IJ INCLUDED HIGH -EARNING ACTIVITIES LIKE HOTE LS, SPAS, AMUSEMENT PARKS AND ROPEWAYS. VIEWED IN THIS CONTEXT, IT IS CLEAR THAT THE ACTIVITY OF RUNNING HOTELS HAS BEEN INCLUDED IN SCHEDULE XIV ONLY WHEN IT IS AN ADJUNC T TO THE MAIN ACTIVITY OF ECO-TOURISM.. 7. THE CIT (APPEALS) CONCLUDED BY HOLDING AS UNDER: 9 6.9 IN A BROAD SENSE ECO-TOURISM MEANS VENTURING INTO AND ENJOYING NATURE TO MINIMIZE AND MITIGATE NEGATI VE IMPACTS ON THE CULTURAL AND NATURAL ENVIRONMENT. IT IS ECOLOGICALLY AND CULTURALLY SENSITIVE TOURISM THAT ALSO HELPS LOCAL COMMUNITIES IN REALIZING THE SOCIAL AND ECONOMIC BENEFITS. THE APPELLANT'S HOTEL IS ADOPTIN G FOLLOWING ECO FRIENDLY NORMS:- A IT IS IN VIEW OF THESE NORMS THAT THE APPELLANT GOT A 'NO OBJECTION CERTIFICATE' REGARDING ECO HOTEL FROM THE DEPARTMENT OF TOURISM, H.P. 6.10 KEEPING IN VIEW THE DISCUSSION ABOVE IT IS HELD THA T THE APPELLANT IS ENTITLED TO DEDUCTION U/S 80IC OF THE I. T. ACT, 1961 ON THE FOLLOWING GROUNDS:- I. THE BUSINESS CARRIED ON BY THE APPELLANT QUALIFIES UNDER ITEM 15 IN SCHEDULE XIV. II. THE APPELLANT QUALIFIES UNDER 'ECO-TOURISM' PROJECT KEEPING IN VIEW THE NORMS ADOPTED BY IT AND NOC FRO M DEPARTMENT OF TOURISM. 8. WITH REGARD TO THE ISSUE OF LATE FURNISHING OF A UDIT REPORT AND EXPANSION BEING FOUND NOT TO BE IN ORDER, OBSERVATI ONS OF THE CIT (APPEALS) WERE THAT APPELLANT WAS HELD ELIGIBLE FOR DEDUCTION U/S 80IC (2)(B) READ WITH PART-C SCHEDULE XIV AND THE APPEAL OF THE APPELLANT IS ALLOWED ON THESE GROUNDS OF APPEAL. 9. THE CIT (APPEALS) ALLOWED THE APPEAL OF THE ASSE SSEE RELATING TO ASSESSMENT YEAR 2007-08 FOLLOWING HER ORDER IN ASSE SSMENT YEAR 2006- 07. HOWEVER, IN ASSESSMENT YEAR 2008-09 THE APPEAL OF THE ASSESSEE CLAIMING DEDUCTION UNDER SECTION 80IC OF THE ACT WA S REJECTED BY THE CIT (APPEALS). THE CIT (APPEALS) VIDE PARAS 4 TO 4 .3 CONSIDERED THE MEANING OF THE TERM ECO-TOURISM AND THE POLICY OF T HE STATE OF H.P. WITH 10 REGARD TO ECO-TOURISM. REFERENCE WAS MADE TO THE O RDER OF ASSESSING OFFICER AT PAGES 11 AND 12 WHERE THE OBJECTIVES OF THE SAID POLICY HAD BEEN REPRODUCED. THE CONCLUSION OF THE CIT (APPEAL S) WAS THAT THE DEFINITION OF ECO-TOURISM WAS TYPICALLY MORE REMOTE THAN CONVENTIONAL TOURISM DESTINATION AND THE ENTRY AT SR.NO.15 IN PA RT-C OF SCHEDULE-XIV OF THE ACT GOES ON TO ELABORATE THAT THE SAID ACTIV ITY OF ECO-TOURISM IS INCLUSIVE OF HOTELS, RESORTS, SPA AMUSEMENTS, PARKS , ETC. THE CIT (APPEALS) VIDE PARA 4.6 REFERRED TO THE SUBMISSION OF THE ASSESSEE ON THE SUBJECT AND THE NO OBJECTION CERTIFICATE ISSUED BY THE DEPARTMENT OF TOURISM, SHIMLA DATED 9.6.2004 UNDER WHICH IT WAS P ROPOSED THAT IT HAD NO OBJECTION FOR CONSIDERING THE HOTEL COMBERMERE A S ECO-HOTEL SUBJECT TO FULFILLMENT OF THE NORMS PRESCRIBED BY THE H.P. STATE ENVIRONMENT PROTECTION AND POLLUTION CONTROL BOARD. THE OBJECT ION OF THE CIT (APPEALS) TO THE ABOVE SAID NOC RELIED UPON BY THE ASSESSEE WERE AS UNDER: A) NOC WAS ISSUED AT THE REQUEST OF THE PROPRIETOR . B) H.P.TOURISM DEVELOPMENT ACT DOES NOT PRESCRIBE ANY NORMS FOR ECO-HOTEL AND, THEREFORE, THE DEPARTMENT OF TOU RISM DOES NOT HAVE ANY LOCUS STANDI TO CERTIFY WHETHER ANY HOTEL CONFIRM TO THE CONCEPT OF ECO-HOTELS OR NOT. C) THE SO-CALLED NOC WAS GIVEN SUBJECT TO FULFILLM ENT OF THE NORMS PRESCRIBED BY H.P. STATE ENVIRONMENT PROTECTI ON AND POLLUTIUON CONTROL BOARD AND EVEN THE VALIDITY OF T HE NOC WAS SUBJECT TO THE APPROVAL OF THE SAID BOARD. IN VIEW THEREOF, THE CIT (APPEALS) OBSERVED THAT THE CONTENTION OF THE ASSES SEE THAT IT WAS CERTIFIED TO BE A ECO-HOTEL BY THE DEPARTMENT OF TO URISM WAS TOTALLY MISCONCEIVED AND MISLEADING. 11 10. FURTHER THE CIT (APPEALS) HELD THAT THE RELIANC E OF THE ASSESSEE ON THE APPROVAL GRANTED BY THE POLLUTION CONTROL BOARD TO BE MISPLACED AS THERE WAS NO DATE OF ISSUANCE MENTIONED ON THE SAID CERTIFICATE. THE CONTENTS OF THE CERTIFICATE ARE REPRODUCED UNDER PA RA 4.7 AT PAGES 13 AND 14 OF THE APPELLATE ORDER. THE OBSERVATIONS OF THE CIT (APPEALS) VIDE PARA 4.8 WERE THAT THE ASSESSEE WAS MIXING UP CONCE PT OF ECO-FRIENDLY WITH ECO-TOURISM AND THE ASSESSEE WAS ONLY COMPLYIN G WITH THE ECO- FRIENDLY NORMS, SUCH AS MANAGEMENT OF HAZARDOUS WAS TE, MAINTENANCE OF GREEN COVER AND MAINTENANCE OF POLLUTION FREE ENVIR ONMENT. THE CIT (APPEALS) HELD THAT THE ASSESSEE HAD STRETCHED CONC EPT TO ECO-FRIENDLY TO CLAIM THAT IT MEANS ECO-TOURISM AND EVEN AFTER CER TIFICATION AS ECO- HOTEL, IT WOULD NOT FALL IN THE CATEGORY OF ECO-TOU RISM WITHIN THE MEANING OF ENTRY NO.15 IN PART-C OF SCHEDULE-XIV OF THE ACT. THE CIT (APPEALS) REFERRED TO THE NEW INDUSTRIAL POLICY AND INCENTIVE PACKAGES INTRODUCED FOR CERTAIN STATES INCLUDING H.P. AND TH E CONSEQUENT INTRODUCTION OF PROVISIONS OF SECTION 80IC OF THE A CT, THE EXCERPTS OF THE FINANCE BILL 2003, VIDE WHICH SECTION 80IC OF THE A CT WAS INSERTED AND HELD THAT THE ACTIVITY OF RUNNING HOTEL HAD BEEN IN CLUDED IN SCHEDULE- XIV ONLY WHEN ITS ADJUNCT TO THE MAIN ACTIVITY OF E CO-TOURISM. FURTHER REFERENCE WAS MADE TO THE PROVISIONS OF SECTION 80I B(7) UNDER WHICH DEDUCTION OUT OF THE PROFITS OF THE HOTELS LOCATED IN HILLY AREAS WERE HELD TO BE ELIGIBLE UP TO ASSESSMENT YEAR 2004-05 AND SU BSEQUENT YEARS, I.E. THE PERIOD FOR WHICH SECTION 80IC OF THE ACT WAS EN ACTED. THE OBSERVATIONS OF CIT (APPEALS) ARE AS UNDER: HAD THE LEGISLATIVE INTENTION BEEN TO MAKE SUCH A H OTEL ELIGIBLE FOR DEDUCTION U/S 80/C, AFTER UNDERTAKING SUBSTANTIAL EXPANSION, A SUITABLE CLAUSE OR PROVISO WOULD HAVE BEEN ADDED TO SECTION 80/8 (7) LAYING DOWN THAT NO DEDUCTION UNDE R THAT SUB-SECTION SHALL BE ALLOWED FOR THE A.Y. 2004-05 OR ANY SUBSEQ UENT YEAR TO ANY 12 HOTEL FALLING UNDER SECTION 80IC(2). IT IS TO BE N OTED THAT A PROVISO ON THESE LINES HAS, IN FACT, BEEN INSERTED IN SECTION 80/8 (4) WHICH RELATES TO AN INDUSTRIAL UNDERTAKING SET UP IN CERTAIN STAT ES INCLUDING HIMACHAL PRADESH. FURTHER, SUB-SECTION (6) OF SECTI ON 80/C A/SO LAYS DOWN THAT THE TOTAL PERIOD OF DEDUCTION UNDER SECTI ON 80/C AND UNDER SECTION 80/8 (4) SHALL NOT EXCEED A PERIOD OF TEN Y EARS. THE SUB-SECTION DOES NOT REFER TO SECTION 80/8 (7). THUS, TAKING TO GETHER THE PROVISIONS OF SECTION 80/8 AND 80/C, IT IS EVIDENT THAT THE DEDUC TION U/S 80/C IS NOT INTENDED TO BE ALLOWED TO HOTELS, UNLESS THEY FORM' , PART OF AN ECO- TOURISM PROJECT. 11. THE CIT (APPEALS) THUS HELD THAT ONLY A HOTEL FUNCTIONING AS A PART OF ECO-TOURISM PROJECT SHAL L BE ELIGIBLE FOR DEDUCTION U/S 80IC AND THE SAID CONDIT ION IS NOT FULFILLED BY THE APPELLANT . 12. THE REVENUE IS IN APPEAL AGAINST THE ORDERS OF CIT (APPEALS) RELATING TO ASSESSMENT YEARS 2006-07 AND 2007-08, I N GRANTING DEDUCTION TO THE ASSESSEE UNDER SECTION 80IC OF THE ACT. 13. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT (APPEALS) IN DENYING THE DEDUCTION UNDER SECTION 80IC OF THE ACT RELATING TO ASSESSMENT YEAR 2008-09. 14. THE LEARNED D.R. FOR THE REVENUE POINTED OUT TH AT THE CONTENTIONS OF THE REVENUE ARE IN THE ORDER OF THE CIT (APPEALS ) RELATING TO ASSESSMENT YEAR 2008-09. THE LEARNED D.R. FOR THE REVENUE POINTED OUT THAT IN PLACE OF GROUND NO.6 IN THE ORIGINAL GROUND S OF APPEAL FILED BY THE REVENUE, THE ADDITIONAL AND SPECIFIC GROUNDS OF APPEAL HAS BEEN RAISED VIDE LETTER DATED 17.3.2011 WHICH MAY BE TAK EN ON RECORD. IT WAS FURTHER POINTED OUT BY THE LEARNED D.R. FOR THE REV ENUE THAT THE CLAIM OF THE ASSESSEE WAS THAT IT HAD UNDERTAKEN SUBSTANTIAL EXPANSION OF ITS HOTEL AND IT WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 80I C OF THE ACT IN VIEW OF ITEM NO.15 IN PART-C OF SCHEDULE-XIV OF THE ACT, WHICH TALKS OF ECO- 13 TOURISM. PLACING RELIANCE ON THE WRITTEN SUBMISSIO N DATED 10.9.2010, THE LEARNED D.R. FOR THE REVENUE TOOK US ELABORATELY TH ROUGH THE ORDER OF THE ASSESSING OFFICER AND POINTED OUT THAT THE ASS ESSEE IS ONLY RUNNING HOTEL WHICH HAD UNDERTAKEN SUBSTANTIAL EXPANSION, B UT THE SAME COULD NOT BE SAID TO HAVE FULFILLED THE CONDITIONS OF SEL F APPRAISAL. THE LEARNED D.R. FOR THE REVENUE FAIRLY ADMITTED THAT D EDUCTION UNDER SECTION 80IC OF THE ACT WAS CLAIMED IN THE RETURN O F INCOME, BUT AUDIT REPORT IN FORM NO.10CCB WAS NOT FILED WITH THE RETU RN OF INCOME AND WAS FILED DURING THE ASSESSMENT PROCEEDINGS. IT WA S FURTHER POINTED OUT THAT THE ASSESSEE HAD FILED THE REVISED AUDIT REPOR T UNDER WHICH IT HAD CLAIMED DEDUCTION UNDER SECTION 80IC OF THE ACT. O UR ATTENTION WAS DRAWN TO THE ADDITIONS MADE TO THE FIXED ASSETS AND IT WAS POINTED OUT THAT THE CHANGES WERE BY WAY OF INVESTMENT IN AC/TV . NO SUCH CHANGES WERE MADE BY THE ASSESSEE WHICH WERE FOR THE CONSER VATION OF THE ENVIRONMENT. NEXT PLEA OF THE LEARNED D.R. FOR THE REVENUE WAS THAT CHANGES MADE BY THE ASSESSEE WERE NOT IN CONSENSUS WITH ECO-TOURISM. REFERRING TO THE ORDER OF THE CIT (APPEALS) RELATIN G TO ASSESSMENT YEAR 2006-07 THE LEARNED D.R. FOR THE REVENUE BROUGHT TO OUR NOTICE THE FINDINGS OF THE CIT (APPEALS) IN PARA 6.6 AT PAGE 7 OF THE APPELLATE ORDER AND POINTED OUT THAT THE CIT (APPEALS) HAS FAILED T O ADDRESS WHAT WERE THE NORMS SPECIFIED FOR TREATING THE PRODUCTS AS EC O-TOURISM AND WHAT WERE THE NORMS FULFILLED BY THE ASSESSEE ENTITLING IT TO DEDUCTION UNDER SECTION 80IC ON THE SAID GROUND. THE LEARNED D.R. FOR THE REVENUE FURTHER POINTED OUT THAT EVEN BEFORE THE EXPANSION WAS UNDERTAKEN BY THE ASSESSEE, THE POLLUTION CONTROL BOARD HAD GIVEN A C ERTIFICATE DATED 9.6.2004. 15. THE LEARNED A.R. FOR THE ASSESSEE IN REPLY STRE SSED THAT THE ISSUE IN THE PRESENT CASE STANDS COVERED BY THE ORDER OF THE TRIBUNAL IN SHRI 14 BIDHI CHAND SINGHAL VS. ITO IN ITA NO.3419/D/2009 A ND M/S ANCHAL HOTELS (P) LTD. VS. ACIT IN ITA NO.1800 & 1801(DEL) /2010 PLACED AT PAGES 357 AND 362 OF THE PAPER BOOK. IT WAS ALSO P OINTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE THAT SIMILARLY PLACED HOTEL LANDMARK IN SHIMLA HAD BEEN GRANTED DEDUCTION UNDER SECTION 80I C OF THE ACT BY THE SAME ASSESSING OFFICER VIDE ORDER PASSED UNDER SECT ION 143(3) OF THE ACT WHICH IS PLACED AT PAGES 373 AND 374 OF THE PAP ER BOOK. THE LEARNED A.R. FOR THE ASSESSEE THEREAFTER POINTED OU T THAT AT PAGE 70 OF THE PAPER BOOK IS PLACED A LETTER BY THE ASSESSEE T O THE DISTRICT TOURISM OFFICER STATING THAT IT HAD COMPLIED WITH THE ECO-F RIENDLY NORMS. REFERENCE WAS MADE TO THE LETTER ISSUED BY THE DEPA RTMENT OF TOURISM TO THE ASSESSEE PLACED AT PAGE 71/72 OF THE PAPER BOOK WHICH AS PER THE ASSESSEE IS DATED 9.6.2004. THE LEARNED A.R. FOR T HE ASSESSEE REFERRED TO THE PROVISIONS OF SECTION 80IC(8)(IX) TO EXPLAIN WH AT IS SUBSTANTIAL EXPANSION. OUR ATTENTION WAS DRAWN TO THE DETAILS FURNISHED AT PAGES 61 TO 63 OF THE PAPER BOOK TO ESTABLISH THE EXPANSION CARRIED OUT BY THE ASSESSEE IN THE FINANCIAL YEAR 2004-05. THE LEARN ED A.R. FOR THE ASSESSEE THEREAFTER REFERRED TO THE WRITTEN SUBMISS IONS FILED BEFORE THE CIT (APPEALS) PLACED AT PAGES 322 TO 349 OF THE PAP ER BOOK AND POINTED OUT THAT AT PAGE 345 THE ASSESSEE HAD EXPLAINED THE QUANTUM OF INVESTMENT MADE IN THE PLANT & MACHINERY WHICH WAS MORE THAN THE BOOK VALUE OF THE PLANT & MACHINERY OWNED BY THE ASSESSE E AS ON 1.4.2004. THE EXPLANATION OF THE ASSESSEE WAS THAT OUT OF THE OPENING BOOK VALUE OF RS.98,18,269/- AS ON 1.4.2004, THE COST OF TV, V CR, GYM EQUIPMENTS AND AC SYSTEM TOTALING RS.14.99 LACS HAD TO BE EXCL UDED AND THE BALANCE COST OF PLANT & MACHINERY WAS 83.19 LACS. THE COST OF ADDITION AS ACCEPTED BY THE ASSESSING OFFICER IN THE PLANT & MA CHINERY WAS RS.44.04 LACS WHICH WAS ABOUT 52.94% OF THE VALUE OF PLANT & MACHINERY AS ON 1.4.2004. THE LEARNED A.R. FOR THE ASSESSEE POINTE D OUT THAT THE LIST OF 15 FIXED ASSETS AS ON 31.3.2004 IS PLACED AT PAGE 94 O F THE PAPER BOOK I.E. THE GROSS VALUE WITHOUT DEPRECIATION AND THE ADDITI ON TO THE PLANT & MACHINERY DURING THE FINANCIAL YEAR 2005-06 WAS RS. 7,39,988/- AS PER LIST PLACED AT PAGE 95 OF THE PAPER BOOK. THE LEAR NED A.R. FOR THE ASSESSEE FAIRLY ADMITTED THAT THE EXEMPTION UNDER S ECTION 80IB (7) OF THE ACT WAS AVAILABLE TO THE HOTEL. HOWEVER, IT WAS PO INTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE THAT THE ASSESSEE FUL FILLS THE CONDITIONS UNDER SECTION 80IC OF THE ACT AND HENCE ENTITLED TO THE CLAIM OF DEDUCTION. IT WAS FURTHER POINTED OUT BY THE LEARN ED A.R. FOR THE ASSESSEE THAT THE ASSESSING OFFICERS CONSIDERATION IN THIS REGARD WAS ERRONEOUS. THE LEARNED A.R. FOR THE ASSESSEE THERE AFTER DREW OUR ATTENTION TO THE RETURN OF INCOME FILED BY THE ASSE SSEE ON 31.10.2006, COPY OF WHICH IS PLACED AT PAGE-1 OF THE PAPER BOOK ALONGWITH COMPUTATION OF INCOME AT PAGE 2 OF THE PAPER BOOK I N WHICH IT WAS POINTED OUT THAT IT HAD CLAIMED DEDUCTION UNDER SEC TION 80IC OF THE ACT AT RS.52.12 LALCS. THE LEARNED A.R. FOR THE ASSESS EE STRESSED THAT THE SAID RETURN OF INCOME THOUGH WAS FILED WITHOUT THE COPY OF THE AUDIT REPORT IN FORM NO.10CCB, BUT FILING OF AUDIT REPORT WAS DIRECTORY AS HELD BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. PUNJAB FINANCIAL CORPORATION [254 ITR 6 (P&H)(FB)] AND BY THE HON'BLE DELHI HIGH COURT IN CIT VS. CONTIMETERS ELECTRICALS P. LT D. [317 ITR 249 (DELHI)]. IN RESPECT OF THE REVISED AUDIT REPORT F URNISHED BY THE ASSESSEE, THE LEARNED A.R. FOR THE ASSESSEE REFERRE D TO THE ORIGINAL AUDIT REPORT PLACED AT PAGE 40 OF THE PAPER BOOK, WHICH I S DATED 23.10.2006 AND THE REVISED AUDIT REPORT PLACED AT PAGE 83 OF T HE PAPER BOOK, WHICH IS DATED 24.11.2008 AND IT WAS POINTED OUT THAT THE MINOR DIFFERENCE IN THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE AC T WAS ON ACCOUNT OF ADDITIONS IN THE PLANT & MACHINERY ACCOUNT. IN RES PECT OF THE ORDER PASSED BY THE CIT (APPEALS) RELATING TO ASSESSMENT YEAR 2008-09, IT WAS 16 POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE TH AT THE CIT (APPEALS) AT PAGE 13 RELIED UPON THE CERTIFICATE DATED 3.1.20 04, THOUGH MENTIONED THE CERTIFICATE DATED 9.6.2004. IT WAS POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE THAT TWO CERTIFICATES WERE ISSUED BY THE POLLUTION CONTROL BOARD, ONE DATED 3.1.2004 AND THE OTHER DAT ED 9.6.2004. 16. THE LEARNED D.R. FOR THE REVENUE IN REJOINDER P OINTED OUT THAT THE RATIO LAID DOWN IN SHRI BIDHI CHAND SINGHAL VS. ITO (SUPRA) WAS NOT APPLICABLE AS IN THE FACTS OF THAT CASE THE ASSESSE E HAD PRODUCED CERTIFICATE FROM POLLUTION CONTROL BOARD. IN RESPE CT OF THE ASSESSEE IT WAS POINTED OUT BY THE LEARNED D.R. FOR THE REVENUE THAT THE CERTIFICATE ISSUED BY THE POLLUTION CONTROL BOARD WAS FOR LIMIT ED PURPOSE AND COULD NOT BE SAID TO HAVE COMPLIED WITH THE PROVISIONS OF SECTION 80IC OF THE ACT. 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD FI LED RETURN OF INCOME ON 31.10.2006 IN WHICH IT HAD CLAIMED DEDUCTION UND ER SECTION 80IC OF THE ACT AGAINST THE PROFITS AND GAINS FROM THE BUSI NESS OF RUNNING THE HOTEL UNDER THE NAME AND STYLE OF HOTEL COMBERMERE AT THE MALL, SHIMLA. THE ACKNOWLEDGEMENT OF FILING THE RETURN AL ONGWITH COMPUTATION OF INCOME ARE PLACED AT PAGES 1 TO 4 OF THE PAPER B OOK. THE NET PROFIT DECLARED FROM THE HOTEL WAS RS.52,12,304/- AND THE DEDUCTION CLAIMED UNDER SECTION 80IC OF THE ACT WAS ALSO RS.52,12,304 /-. THE PROFITS OF THE BUSINESS DECLARED BY THE ASSESSEE WERE SUPPORTE D BY AUDIT REPORT FURNISHED BY THE ASSESSEE IN FORM NO.3CB AND 3CD, W HICH ARE ENCLOSED AT PAGES 5 TO 24 OF THE PAPER BOOK ALONGWITH COPY O F AUDITED BALANCE SHEET, PROFIT & LOSS ACCOUNT AND THE ANNEXURE AT PA GES 25 TO 35 OF THE PAPER BOOK. THE PERUSAL OF THE LIST OF FIXED ASSET S AS ON 31.3.2006 REFLECTS NO MAJOR ADDITION TO THE FIXED ASSETS DURI NG THE YEAR EXCEPT TO 17 THE VEHICLE ACCOUNT, FURNITURE & FIXTURES AND KITCH EN EQUIPMENTS. THE LIST OF THE FIXED ASSETS AS ON 31.3.2006 IS PLACED AT PAGE 28 OF THE PAPER BOOK. THE CLAIM OF THE ASSESSEE WAS THAT IT HAD UN DERTAKEN SUBSTANTIAL EXPANSION AFTER 1.4.2003 TO 25.3.2005 AND IN VIEW O F ITS ADDITIONS MADE IN THE PLANT & MACHINERY ACCOUNT DURING THE SAID PE RIOD THE ASSESSEE HAD COMPLIED WITH THE PROVISIONS OF SECTION 80IC OF THE ACT REGARDING SUBSTANTIAL EXPANSION AND CONSEQUENTLY WAS ENTITLED TO THE DEDUCTION AVAILABLE UNDER SECTION 80IC OF THE ACT FOR RUNNING HOTEL IN THE STATE OF HIMACHAL PRADESH AS IT HAD COMPLIED WITH THE CONDIT IONS OF RUNNING INFRASTRUCTURE FACILITY AS IN ITEM NO.15, PART-C OF FOURTEENTH SCHEDULE OF THE ACT WHICH WAS INSERTED BY THE FINANCE ACT 2003 W.E.F. 1.4.2004. THE SECOND PLEA OF THE ASSESSEE WAS THAT IT HAD CLA IMED THE SAID EXPENDITURE IN THE RETURN OF INCOME FILED WITHIN DU E DATE OF FILING THE RETURN OF INCOME. HOWEVER, THOUGH THE AUDITORS HAD FURNISHED THE AUDIT REPORT DATED 23.10.2006 IN THE PRESCRIBED PROFORMA I.E. FORM NO.10CCB ALONGWITH AUDIT REPORT UNDER SECTION 44AB OF THE AC T, HOWEVER, BY A CLERICAL ERROR THE SAME WAS NOT ATTACHED WITH THE R ETURN OF INCOME AT THE TIME OF FILING THE SAME. THE ASSESSEE CLAIMS TO HA VE FILED THE SAID REPORT IN FORM NO.10CCB BEFORE THE DEPARTMENT AS SOON AS T HE SAME CAME TO HIS KNOWLEDGE. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE ASSESSEE FURNISHED A REVISED AUDIT REPORT IN FORM N O.10CCB VIS-A-VIS VALUE OF THE ASSETS WHICH WERE PART OF ITS SUBSTANT IAL EXPANSION, AS REQUISITIONED UNDER THE PROVISIONS OF SECTION 80IC OF THE ACT. 18. SECTION 80IC OF THE ACT READS AS UNDER: 80-IC. (1) WHERE THE GROSS TOTAL INCOME OF AN ASS ESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN E NTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SECTION (2), THERE SHAL L, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOW ED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFI TS AND GAINS, AS SPECIFIED IN SUB-SECTION (3). 18 (2) THIS SECTION APPLIES TO ANY UNDERTAKING OR ENTE RPRISE, (A) WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PR ODUCE ANY ARTICLE OR THING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEENTH SCHEDULE, OR WHICH MANUFACTURES OR PRODUCES ANY ART ICLE OR THING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEE NTH SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING (I) ON THE 23RD DAY OF DECEMBER, 2002 AND ENDING B EFORE THE 1ST DAY OF APRIL, [2007], IN ANY EXPORT PROCESSING ZONE OR INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTRIAL GRO WTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PARK OR SOFTWARE TE CHNOLOGY PARK OR INDUSTRIAL AREA OR THEME PARK, AS NOTIFIED BY TH E BOARD IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY T HE CENTRAL GOVERNMENT IN THIS REGARD, IN THE STATE OF SIKKIM; OR (II) ON THE 7TH DAY OF JANUARY, 2003 AND ENDING BE FORE THE 1ST DAY OF APRIL, 2012, IN ANY EXPORT PROCESSING ZONE OR INTEG RATED INFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTRIAL GRO WTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PARK OR SOFTWARE TE CHNOLOGY PARK OR INDUSTRIAL AREA OR THEME PARK, AS NOTIFIED BY TH E BOARD IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY T HE CENTRAL GOVERNMENT IN THIS REGARD, IN THE STATE OF HIMACHAL PRADESH OR THE STATE OF UTTARANCHAL; OR (III) ON THE 24TH DAY OF DECEMBER, 1997 AND ENDING BEFORE THE 1ST DAY OF APRIL, 2007, IN ANY EXPORT PROCESSING ZONE OR IN TEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTRIAL GRO WTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PARK OR SOFTWARE TE CHNOLOGY PARK OR INDUSTRIAL AREA OR THEME PARK, AS NOTIFIED BY TH E BOARD IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY T HE CENTRAL GOVERNMENT IN THIS REGARD, IN ANY OF THE NORTH-EAST ERN STATES; (B) WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR P RODUCE ANY ARTICLE OR THING, SPECIFIED IN THE FOURTEENTH SCHEDULE OR C OMMENCES ANY OPERATION SPECIFIED IN THAT SCHEDULE, OR WHICH MANU FACTURES OR PRODUCES ANY ARTICLE OR THING, SPECIFIED IN THE FOU RTEENTH SCHEDULE OR COMMENCES ANY OPERATION SPECIFIED IN THAT SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING (I) ON THE 23RD DAY OF DECEMBER, 2002 AND ENDING B EFORE THE 1ST DAY OF APRIL, 31 [2007], IN THE STATE OF SIKKIM; OR (II) ON THE 7TH DAY OF JANUARY, 2003 AND ENDING BE FORE THE 1ST DAY OF APRIL, 2012, IN THE STATE OF HIMACHAL PRADESH OR TH E STATE OF UTTARANCHAL; OR (III) ON THE 24TH DAY OF DECEMBER, 1997 AND ENDING BEFORE THE 1ST DAY OF APRIL, 2007, IN ANY OF THE NORTH-EASTERN STATES. (3) THE DEDUCTION REFERRED TO IN SUB-SECTION (1) SH ALL BE (I) IN THE CASE OF ANY UNDERTAKING OR ENTERPRISE R EFERRED TO IN SUB-CLAUSES (I) AND (III) OF CLAUSE (A) OR SUB-CLAUSES (I) AND (III) OF CLAUSE (B), OF SUB-SECTION (2), ONE HUNDRED PER CENT OF SUCH PROFI TS AND GAINS FOR TEN ASSESSMENT YEARS COMMENCING WITH THE INITIAL ASSESS MENT YEAR; 19 (II) IN THE CASE OF ANY UNDERTAKING OR ENTERPRISE REFERRED TO IN SUB-CLAUSE (II) OF CLAUSE (A) OR SUB-CLAUSE (II) OF CLAUSE (B) , OF SUB-SECTION (2), ONE HUNDRED PER CENT OF SUCH PROFITS AND GAINS FOR FIVE ASSESSMENT YEARS COMMENCING WITH THE INITIAL ASSESSMENT YEAR AND THE REAFTER, TWENTY- FIVE PER CENT (OR THIRTY PER CENT WHERE THE ASSESSE E IS A COMPANY) OF THE PROFITS AND GAINS. (4) THIS SECTION APPLIES TO ANY UNDERTAKING OR ENTE RPRISE WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY: (I) IT IS NOT FORMED BY SPLITTING UP, OR THE RECON STRUCTION, OF A BUSINESS ALREADY IN EXISTENCE : PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RESPECT OF A N UNDERTAKING WHICH IS FORMED AS A RESULT OF THE RE-E STABLISHMENT, RECONSTRUCTION OR REVIVAL BY THE ASSESSEE OF THE BU SINESS OF ANY SUCH UNDERTAKING AS IS REFERRED TO IN SECTION 33B , IN THE CIRCUMSTANCES AND WITHIN THE PERIOD SPECIFIED IN THAT SECTION; (II) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUS INESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. EXPLANATION.THE PROVISIONS OF EXPLANATIONS 1 AND 2 TO SUB-SECTION (3) OF SECTION 80-IA SHALL APPLY FOR THE PURPOSES OF CLAUSE (II) OF THI S SUB- SECTION AS THEY APPLY FOR THE PURPOSES OF CLAUSE (I I) OF THAT SUB-SECTION. (5) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, NO DEDUCTION SHALL BE ALLOWED UNDER ANY OTHER SECTION CONTAINED IN CHAPTE R VIA OR IN SECTION 10A OR SECTION 10B , IN RELATION TO THE PROFITS AND GAINS OF THE UNDERTAKING OR ENTERPRISE. (6) NOTWITHSTANDING ANYTHING CONTAINED IN THIS ACT, NO DEDUCTION SHALL BE ALLOWED TO ANY UNDERTAKING OR ENTERPRISE UNDER THIS SECTION, WHERE THE TOTAL PERIOD OF DEDUCTION INCLUSIVE OF THE PERIOD O F DEDUCTION UNDER THIS SECTION, OR UNDER THE SECOND PROVISO TO SUB-SECTION (4) OF SECTION 80-IB OR UNDER SECTION 10C , AS THE CASE MAY BE, EXCEEDS TEN ASSESSMENT YEARS. (7) THE PROVISIONS CONTAINED IN SUB-SECTION (5) AND SUB-SECTIONS (7) TO (12) OF SECTION 80-IA SHALL, SO FAR AS MAY BE, APPLY TO THE ELIGIBLE UNDERTAKING OR ENTERPRISE UNDER THIS SECTION. (8) FOR THE PURPOSES OF THIS SECTION, (I) INDUSTRIAL AREA MEANS SUCH AREAS, WHICH THE BOARD, MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, SPECIFY IN AC CORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVERNMEN T; (II) INDUSTRIAL ESTATE MEANS SUCH ESTATES, WHICH THE BOARD, MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, SPECIFY IN AC CORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVERNMEN T; (III) INDUSTRIAL GROWTH CENTRE MEANS SUCH CENTRE S, WHICH THE BOARD, MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, SPECI FY IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVER NMENT; (IV) INDUSTRIAL PARK MEANS SUCH PARKS, WHICH THE BOARD, MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, SPECIFY IN AC CORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVERNMEN T; 20 (V) INITIAL ASSESSMENT YEAR MEANS THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING OR THE ENTER PRISE BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS, OR COMME NCES OPERATION OR COMPLETES SUBSTANTIAL EXPANSION; (VI) INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE MEANS SUCH CENTRES, WHICH THE BOARD, MAY, BY NOTIFICATION IN THE OFFICI AL GAZETTE, SPECIFY IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED B Y THE CENTRAL GOVERNMENT; (VII) NORTH-EASTERN STATES MEANS THE STATES OF A RUNACHAL PRADESH, ASSAM, MANIPUR, MEGHALAYA, MIZORAM, NAGALAND AND TR IPURA; (VIII) SOFTWARE TECHNOLOGY PARK MEANS ANY PARK S ET UP IN ACCORDANCE WITH THE SOFTWARE TECHNOLOGY PARK SCHEME NOTIFIED B Y THE GOVERNMENT OF INDIA IN THE MINISTRY OF COMMERCE AND INDUSTRY; (IX) SUBSTANTIAL EXPANSION MEANS INCREASE IN THE INVESTMENT IN THE PLANT AND MACHINERY BY AT LEAST FIFTY PER CENT OF THE BOO K VALUE OF PLANT AND MACHINERY (BEFORE TAKING DEPRECIATION IN ANY YEAR), AS ON THE FIRST DAY OF THE PREVIOUS YEAR IN WHICH THE SUBSTANTIAL EXPAN SION IS UNDERTAKEN; (X) THEME PARK MEANS SUCH PARKS, WHICH THE BOARD , MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, SPECIFY IN AC CORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVERNMEN T.] 19. THE RELEVANT PROVISIONS OF SECTION 80IC OF THE ACT APPLICABLE TO THE PRESENT FACTS ARE SUB-SECTION 2(B) TO SECTION 8 0IC OF THE ACT UNDER WHICH THE ASSESSEE HAS CLAIMED THE AFORESAID DEDUCT ION. THE PROVISIONS OF SECTION 80IC(2) OF THE ACT PROVIDES THAT WHERE THE UNDERTAKING OR ENTERPRISE HAS COMMENCED ANY OPERATION SPECIFIED IN FOURTEENTH SCHEDULE OF THE ACT AND HAD UNDERTAKEN SUBSTANTIAL EXPANSION DURING THE PERIOD 7.1.2003 TO 1.4.2012 IN THE STATE OF HIMACHA L PRADESH OR IN THE STATE OF UTTRANCHAL, WOULD BE ELIGIBLE FOR THE DEDU CTION UNDER SECTION 80IC OF THE ACT. SUB-SECTION (3) TO SECTION 80IC O F THE ACT LAYS DOWN THAT THE UNDERTAKING OR ENTERPRISES WOULD BE ENTITL ED TO DEDUCTION OF 100% OF SUCH PROFITS AND GAINS FOR FIVE ASSESSMENT YEARS COMMENCING WITH THE INITIAL ASSESSMENT YEAR AND THEREAFTER 25% OF ITS PROFITS AND GAINS FOR THE BALANCE FIVE YEARS. THE EXPRESSION SUBSTANTIAL EXPANSION FOR THE PURPOSE OF SECTION 80IC IS DEFINED UNDER SU B-SECTION (8) (IX) TO SECTION 80IC OF THE ACT. THE UNDERTAKING OR ENTERP RISES IN ORDER TO THE ELIGIBLE FOR SUBSTANTIAL EXPANSION SHOULD HAVE INCR EASED THE INVESTMENT 21 IN THE PLANT & MACHINERY BY ATLEAST 50% OF THE BOOK VALUE OF PLANT & MACHINERY, BEFORE TAKING DEPRECIATION IN ANY YEAR A S ON THE FIRST DAY OF THE PREVIOUS YEAR, IN WHICH SUBSTANTIAL EXPANSION I S UNDERTAKEN. IN OTHER WORDS, IN ORDER TO BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IC OF THE ACT, IN ADDITION TO FULFILLING THE INITIAL COND ITIONS, AN UNDERTAKING OR ENTERPRISES MUST UNDERTAKE SUBSTANTIAL EXPANSION BY WAY OF INVESTMENT IN ITS PLANT & MACHINERY TO THE EXTENT AS PROVIDED IN SUB-SECTION (8)(IX) TO SECTION 80IC OF THE ACT I.E. AN ASSESSEE WOULD H AVE ENTITLED TO THE BENEFIT OF DEDUCTION UNDER SECTION 80IC(2)(B) OF TH E ACT IN ALL SUCH CASES WHERE UNDERTAKING OF ENTERPRISES IS CARRYING ON THE BUSINESS AS ENVISAGED THEREIN AND ALSO ADDITION HAS BEEN MADE T O THE PLANT & MACHINERY BY WAY OF INVESTMENT, WHICH IS MORE THAN 50% OF THE BOOK VALUE OF THE PLANT & MACHINERY ON THE FIRST DAY OF THE FINANCIAL YEAR, IN WHICH SUBSTANTIAL EXPANSION WAS UNDERTAKEN BEFORE C LAIMING DEPRECIATION. 20. UNDER THE FOURTEENTH SCHEDULE TO THE INCOME TAX ACT, LIST OF ARTICLES OR THINGS OR OPERATIONS ELIGIBLE FOR DEDUC TION UNDER SECTION 80IC OF THE ACT ARE ENLISTED. PART-C IS IN RELATION TO THE STATE OF HIMACHAL PRADESH AND STATE OF UTTRANCHAL. ITEM NO.15 IN PAR T-C OF THE FOURTEENTH SCHEDULE READS AS UNDER: ECO-TOURISM INCLUDING HOTELS, RESORTS, SPA, ENTERTAINMENT/AMUSEMENT PARKS AND ROPEWAYS . 21. THE ABOVE SAID DEFINITION AND THE OPERATION TO BE CARRIED OUT IN THE FIELD OF ECO-TOURISM ARE EXCLUSIVELY DEFINED BY THE ACT TO INCLUDE THE PROVISIONS OF INFRASTRUCTURE I.E. HOTELS, RESORTS, SPA, ENTERTAINMENT/AMUSEMENT PARKS AND ROPEWAYS. IN VIE W OF THE POLICY OF GOVERNMENT OF INDIA, IT TRANSPIRES THAT INCENTIVES ARE PROVIDED TO THE UNDERTAKING OR ENTERPRISES FOR SETTING UP INFRASTRU CTURE IN THE STATE OF 22 HIMACHAL PRADESH OR STATE OF UTTRANCHAL IN ORDER TO PROMOTE ECO-TOURISM WHICH IN TURN INCLUDES SETTING UP OF HOTELS, RESORT S, SPA, ENTERTAINMENT/AMUSEMENT PARKS AND ROPEWAYS IN SUPPO RT OF THE POLICY OF ENCOURAGING TOURISM IN THE STATE. IT IS AN ESTABLI SHED PRINCIPLE THAT THE PROVISIONS OF INCENTIVE OR GROWTH AND DEVELOPMENT O F THE STATE SHOULD BE INTERPRETED LIBERALLY, IN ORDER TO ACHIEVE THE OBJE CT OF ALLOWING DEDUCTION TO THE UNDERTAKING OR ENTERPRISES, WHICH ESTABLISHES ITS INFRASTRUCTURE IN THE RESPECTIVE STATES FOR FURTHER ANCE OF THE OBJECT OF THE POLICY FRAMED THEREUNDER. IT IS EVIDENT THAT THE S TATUTE HAS PROVIDED DEDUCTION BY WAY OF SECTION 80IC OF THE ACT TO SUCH UNDERTAKINGS OR ENTERPRISES WHICH COMMENCES ANY OPERATION SPECIFIED IN THE FOURTEENTH SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURIN G THE PRESCRIBED PERIOD WITHIN THE STATE, WOULD BE ENTITLED TO THE B ENEFIT BY WAY OF DEDUCTION FROM THE PROFITS AND GAINS OF THE BUSINES S, WHICH IN THE CASE OF PRESENT ASSESSEE I.E. RELATING TO SECTION 80IC ( 2)(B) OF THE ACT WOULD BE 100% OF SUCH PROFITS AND GAINS FOR FIVE ASSESSME NT YEARS COMMENCING WITH THE INITIAL ASSESSMENT YEAR AND 25% OF THE PRO FITS AND GAINS OF THE BUSINESS FOR THE NEXT FIVE ASSESSMENT YEARS. THE D EFINITION OF ECO- TOURISM UNDER THE FOURTEENTH SCHEDULE IS INCLUSIVE DEFINITION AND INCLUDES WITHIN ITS DEFINITION THE PROVISIONS BY WA Y OF HOTELS, RESORTS, SPA, ENTERTAINMENT/AMUSEMENT PARKS AND ROPEWAYS. H OWEVER, THE STATE OF HIMACHAL PRADESH HAS FURTHER LAID DOWN BROAD PAR AMETERS FOR THE GRANT OF STATUS ECO-TOURISM TO AN UNDERTAKING OR EN TERPRISES WHICH IN TURN HAS TO OBTAIN NO OBJECTION CERTIFICATE UNDER T HE NORMS SET UP BY THE HIMACHAL PRADESH STATE ENVIRONMENT PROTECTION POLLU TION CONTROL BOARD. WHERE AN UNDERTAKING OR ENTERPRISES FULFILLS THE AB OVE SAID CONDITIONS, IT IS ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SECTION 80 IC(2)(B) OF THE ACT. 23 22. NOW COMING TO THE FACTS OF THE PRESENT CASE, WE FIND THAT THE ASSESSEE WAS RUNNING A HOTEL AT THE MALL, SHIMLA. HOWEVER, STARTING FROM 1.4.2003 TO 25.3.2005 THE ASSESSEE CLAIMS TO H AVE UNDERTAKEN SUBSTANTIAL EXPANSION IN ITS HOTEL AND MADE TOTAL A DDITION OF RS.61,31,864/- TO THE PLANT & MACHINERY AS AGAINST GROSS COST OF PLANT & MACHINERY AS ON 1.4.2003 OF RS.90,78,284/-, MAKING ITS CLAIM OF ELIGIBILITY BY WAY OF SUBSTANTIAL EXPANSION IN VIEW OF THE PROVISIONS OF SECTION 80IC OF THE ACT. THE ASSESSEE HAD FURNISHE D ON RECORD AT PAGE 94 OF THE PAPER BOOK THE DETAILS OF PLANT & MACHINE RY, AS ON 1.4.2003 WITH GROSS VALUE OF RS.90,78,284/- REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE SAID LIST OF PLANT & MACHINERY I S AS UNDER : DETAIL OF PLANT & MACHINERY (GROSS VALUE) AS ON OI.04.2003 IN THE BOOKS OF HOTEL COMBERMERE, SHIMLA S.NO. PARTICULARS GROSS VALUE AS ON 01.04.2003 1 ELECTRICAL APPLIANCES 919,022.44 2 REFRIGERATORS 389,030.00 3 TV & VCR 784,021.00 4 PLANT AND MACHINERY 515,693.55 5 EPABX 348,605.40 6 COMPUTERS 621,876.36 7 FIRE FIGHTING EQUIPMENTS 35,216.50 8 OFFICE EQUIPMENTS 78,598.83 9 GENERATOR 500,137.60 10 KITCHEN EQUIPMENTS 1,039,141.19 11 LIFT 3,488,910.13 12 GYM EQUIPMENTS 155,000.00 13 PENT HOUSE EQUIPMENTS 203,028.31 9,078,281.31 23. THE ADDITIONS TO THE PLANT & MACHINERY DURING T HE PERIOD 1.4.2003 TO 31.3.2004 AS ENLISTED AT PAGE 95 OF THE PAPER BO OK WERE TOTALING RS.7,39,988/- AND CONSEQUENTLY THE GROSS COST OF PL ANT & MACHINERY, 24 WITHOUT CLAIMING DEPRECIATION, AS ON 1.4.2004 WAS R S.98,18,269/-. THE ASSESSEE DURING THE PERIOD 1.4.2004 TO 25.3.2005 HA D MADE THE UNDERMENTIONED ADDITIONS TO THE PLANT & MACHINERY T OTALING RS.62,35,827/-: DETAIL OF ADDITIONS IN PLANT & MACHINERY DURING THE PERIOD 01.04-2004 TO 25.03.2005 S.NO. PARTICULARS ADDITIONS (RS.) 1 REFRIGERATORS 10,09,747.00 2 TV /VCR/MUSIC SYSTEM 11,22,140.20 3 PLANT AND MACHINERY 19,68,525.00 4 COMPUTERS 1,81,712.00 5 OFFICE EQUIPMENTS 22,000.00 6 GENERATOR 5,15,472.00 7 KITCHEN EQUIPMENTS 12,17,578.50 8 GYM EQUIPMENTS 1,98,653.00 6,235,827.70 24. THE CLAIM OF THE ASSESSEE THAT THE AFORESAID AD DITION IN THE PLANT & MACHINERY OF RS.62,35,827/- AS COMPARED TO THE BOOK VALUE OF PLANT & MACHINERY AS ON 1.4.2004 OF RS.98,18,269/- WAS 63.5 % OF THE BOOK VALUE OF PLANT & MACHINERY AS ON 1.4.2004. CONSEQUENTLY THERE WERE SUBSTANTIAL EXPANSION IN THE FINANCIAL YEAR 2004-05 I.E. ASSESSMENT YEAR 2005-06 IN TERMS OF SECTION 80IC(2)(B) READ WITH CL AUSE (IX) OF SUB- SECTION (8) OF SECTION 80IC OF THE ACT. 25. THE SECOND ASPECT OF THE CLAIM OF DEDUCTION UND ER SECTION 80IC OF THE ACT BY THE ASSESSEE WAS THAT THE HOTEL BEING AN ECO-HOTEL WHICH FALLS WITHIN THE DEFINITION ENSHRINED IN ITEM NO.15, UNDE R PART-C OF FOURTEENTH SCHEDULE OF THE ACT. THE ASSESSEE CLAIM S THAT THE HOTEL COMBEREMERE WAS AN ECO-HOTEL AS IT WAS ECO-FRIENDLY IN TERMS OF THE NORMS PRESCRIBED BY HIMACHAL PRADESH STATE ENVIRONM ENT PROTECTION POLLUTION CONTROL BOARD WHICH HAD ISSUED A CERTIFIC ATE TO IT. IN ADDITION 25 THE ASSESSEE CLAIMS TO HAVE PROMOTED RECYCLING, ENE RGY EFFICIENCY, WATER REUSE AND CREATION OF ECONOMIC OPPORTUNITY FOR LOCA L COMMUNITIES WHICH WERE IN FURTHERANCE OF THE POLICY FRAMED BY THE ST ATE GOVERNMENT OF HIMACHAL PRADESH TO PROMOTE ECO-TOURISM IN THE STAT E. THE DEPARTMENT OF TOURISM HAD ISSUED A CERTIFICATE DATED 30.1.2007 TO THE ASSESSEE, WHICH IS PLACED AT PAGE 71 OF THE PAPER BOOK, WHICH READS AS UNDER: THEREFORE, ON THE BASIS OF CONSENT/APPROVAL TO OPERATE IS GIVEN TO HOTEL COMBERMERE FOR ADHERING T HE NORMS PRESCRIBED UNDER THE SAID ACTS AND THE HP STA TE ENVIRONMENT PROTECTION & POLLUTION CONTROL BOARD SHIMLA THIS OFFICE HAS NO OBJECTION FOR CONSIDERING HOTEL COMBERMERE AS ECO HOTEL SUBJECT TO THE FULFILLMENT OF THE NORMS PRESCRIBED BY THE HP STATE ENVIRONMENT PROTECTION & POLLUTION CONTROL BOARD AN D ALSO THE VALIDITY OF THIS NO OBJECTION CERTIFICATE IS SUBJECT TO THE APPROVAL OF THE HP STATE ENVIRONMENT PROTECTION & POLLUTION CONTROL BOARD SHIMLA. 26. THE ASSESSEE HAD ALSO RECEIVED A CERTIFICATE FR OM HIMACHAL PRADESH STATE ENVIRONMENT PROTECTION AND POLLUTION CONTROL BOARD WHICH IS DATED 9.6.2004 AND IS VALID TILL 31.3.2009 UNDER WHICH IT IS AUTHORIZED TO OPERATE FACILITY FOR COLLECTION OF STORAGE OF HAZAR DOUS WASTE ON THE PREMISES SITUATED AT SHIMLA. THIS CERTIFICATE BY T HE BOARD WAS RENEWED ON THE EARLIER AUTHORIZATION DATED 3.1.2004 GRANTED TO THE ASSESSEE UP TO 31.3.2004. THE SAID CERTIFICATION IS IN OPERATION AND IS VALID AS NO EVIDENCE HAS BEEN BOUGHT ON RECORD TO THE CONTRARY BY THE AUTHORITIES BELOW. IN VIEW OF THE ABOVE SAID CERTIFICATE ISSUE D BY THE MINISTRY OF TOURISM TO THE ASSESSEE DATED 31.1.2007 AND THE CER TIFICATION BY THE HIMACHAL PRADESH STATE ENVIRONMENT PROTECTION AND P OLLUTION CONTROL BOARD DATED 9.6.2004 AND THE SUBSTANTIAL EXPANSION CARRIED OUT BY THE ASSESSEE, WE ARE OF THE VIEW THAT THE ASSESSEE FULF ILLS THE CONDITIONS LAID DOWN UNDER SECTION 80IC(2)(B) OF THE ACT READ WITH SECTION 80IC (8)(IX) 26 OF THE ACT IN LINE WITH ITEM NO.15 OF PART-C OF FOU RTEENTH SCHEDULE OF THE ACT AND HENCE IS ELIGIBLE FOR THE CLAIM OF DEDU CTION UNDER SECTION 80IC OF THE ACT. 27. NOW COMING TO THE OBJECTIONS OF THE ASSESSING OFFICER IN GRANTING DEDUCTION UNDER SECTION 80IC OF THE ACT, THE FIRST OBJECTION OF THE ASSESSING OFFICER WAS THAT CERTAIN ITEMS COULD NOT FORM PART OF THE PLANT & MACHINERY WITHIN THE MEANING OF SUBSTANTIAL EXPAN SION, WHICH ARE AS UNDER: A. PURCHASE OF 4 SPLIT A.C'S RS.3,61,080/- B. INSTALLATION/COMMISSIONING CHARGES RS.1,49,500/- C. PURCHASE OF 45 COLOR T.V'S RS.5,50,080/- D. PUCHASE OF MUSIC SYSTEMS RS.5,72,060/- E. GYM EQUIPMENTS RS.1,98,653/- TOTAL RS.18,31,373 28. THE CONCLUSION OF THE ASSESSING OFFICER WAS THA T IN CASE ABOVE SAID ITEMS TOTALING RS.18,31,373/- WERE EXCLUDED, T HE VALUE OF SUBSTANTIAL EXPANSION COMES DOWN TO RS.44,04,454/- (RS.62,35,827/- MINUS RS.18,31,373/-) AND THIS AMOUNT WAS LESS THAN 50% OF OPENING BOOK VALUE OF RS.98,18,269/- OF PLANT AND MACHINERY IN THAT YEAR. IN VIEW THEREOF, HE HELD THAT THE ASSESSEE CANNOT BE S AID TO HAVE UNDERTAKEN SUBSTANTIAL EXPANSION WITHIN THE MEANING AS PROVIDE D IN THE ACT. THE EXPLANATION OF THE ASSESSEE IN THIS REGARD WAS THAT IF THE CONTENTION OF THE ASSESSING OFFICER IS TO BE ACCEPTED I T IS NECESSARY TO WORK OUT THE GROSS COST OF PLANT & MACHINERY AS ON 1.4.2004 AFTE R EXCLUDING THESE ITEMS FROM THE GROSS COST ALSO. AS SUCH GROSS COST OF PLANT & MACHINERY COMES TO: VALUES AS SHOWN EARLIER RS.98,18,268.31 LESS: COST OF TVS & VCR RS.11,06,011.00 GYM EQUIPMENTS RS. 2,11,100.00 AC SYSTEMS RS. 1,82.120.00 RS. 14.99.231.00 27 BALANCE COST OF PLANT & MACHINERY RS. 83,19,038 .31 AS ON 1.4.2004 COST OF ADDITIONS ACCEPTED BY THE ASSESSING OFFICER RS. 44,04,454.00 (AS PER ASSESSMENT ORDER) - ADDITION REQUIRED FOR SUBSTANTIAL EXPANSION 50% OF COST AS ON 1.4.2004 RS.41,59,519.15 ACTUAL ADDITION MADE RS.44,04,454.00 WHICH IS 52.94% OF THE VALUE OF PLANT & M,ACHINERY AS ON 1.4.2004 29. IN THE FIRST INSTANCE WE ARE NOT IN CONFORMITY WITH THE OBSERVATION OF THE ASSESSING OFFICER IN EXCLUDING THE ITEMS OF AC, COLOUR TV, MUSIC SYSTEMS AND GYM EQUIPMENTS OUT OF THE LIST OF PLANT & MACHINERY AS EACH OF THE ABOVE SAID ITEMS ARE IN THE NATURE OF P LANT & MACHINERY AND ITS COSTS ARE TO BE CONSIDERED FOR COMPUTING THE VA LUE OF SUBSTANTIAL EXPANSION. IN ANY CASE, EVEN IF THE SAID ITEMS ARE EXCLUDED FROM THE LIST OF SUBSTANTIAL EXPANSION IN THE PLANT & MACHINERY, THE CORRESPONDING VALUE IS TO BE EXCLUDED FROM THE GROSS COST OF PLAN T & MACHINERY AS ON 1.4.2004 AND THE TOTAL INVESTMENT BY THE ASSESSEE I N THE PLANT & MACHINERY DURING THE PERIOD 1.4.2004 TO 25.3.2005 W OULD BE 52.94% OF THE VALUE OF PLANT & MACHINERY AS ON 1.4.2004, AS T ABULATED IN PARAS HEREINABOVE AND THE SAME IS IN ORDER AND FULFILLS T HE CONDITION OF SUBSTANTIAL EXPANSION AS STIPULATED IN SECTION 80IC (8)(IX) OF THE ACT. 30. NOW COMING TO THE NEXT OBJECTION OF THE ASSESSI NG OFFICER IN GRANTING DEDUCTION UNDER SECTION 80IC OF THE ACT WA S NON-FILING OF AUDIT REPORT ALONGWITH RETURN OF INCOME. VARIOUS COURTS HAVE LAID DOWN THAT THE PROVISIONS OF FILING THE AUDIT REPORT ALONGWITH RETURN OF INCOME IS DIRECTORY AND NOT MANDATORY. REFERENCE IS MADE TO DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. PUNJ AB FINANCIAL CORPORATION [254 ITR 6 (P&H)(FB)] (SUPRA) AND TO TH E DECISION OF HON'BLE DELHI HIGH COURT IN CIT VS. CONTIMETERS ELE CTRICALS P. LTD. 28 [317 ITR 249 (DELHI)] (SUPRA). IN THE FACTS OF THE PRESENT CASE BEFORE US THE ASSESSEE HAD FURNISHED AUDIT REPORT IN FORM NO. 10CCB DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND HAD ALSO FILED REVISED COMPUTATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHICH WAS CONSIDERED FOR ALLOWING THE CLAIM OF THE ASSESSEE. THE ASSESSEE H AVING CLAIMED DEDUCTION UNDER SECTION 80IC OF THE ACT IN ITS RETU RN OF INCOME, WHICH IN TURN WAS SUPPORTED BY THE AUDIT REPORT IN FORM NO.3 CB & 3CD AND ALSO 10CCB AS CERTIFIED BY THE ACCOUNTANT, THE SAID CLAI M MERITS TO BE ALLOWED TO THE ASSESSEE. 31. WE FIND THAT SIMILAR ISSUE OF CLAIM OF DEDUCTIO N UNDER SECTION 80IC OF THE ACT ON THE GROUND OF THE ASSESSEE HAVING FUL FILLED THE CONDITION OF ECO-TOURISM AS SPECIFIED IN ITEM NO.15 OF FOURTEEN SCHEDULE OF THE ACT AROSE BEFORE THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF SHRI BIDHI CHAND SINGHAL VS. ITO IN ITA NO.3419/D/2009 FOR ASS ESSMENT YEAR 2006-07. THE ASSESSING OFFICER IN THE SAID CASE HA D OBSERVED THAT THE HOTEL ELIGIBLE FOR DEDUCTION UNDER SECTION 80IC OF THE ACT SHOULD ALSO BE A HOTEL WHICH IS ENVIRONMENT FRIENDLY, RELYING UPON THE DEFINITION OF ECO-TOURISM ETC., THE TRIBUNAL VIDE ORDER DATED 4.1 1.2010 AND RELYING UPON THE PROVISIONS OF SECTION 80IC OF THE ACT AND ITEM NO.15 OF PART-C OF FOURTEEN SCHEDULE HELD, IT CAN BE OBSERVED WHAT IS ELIGIBLE FOR DEDUCTION IS ECO-TOURISM WHICH INCLUDE INTER-ALIA H OTELS . THE TRIBUNAL FURTHER NOTED THAT THE HOTEL WAS APPROVED BY THE GOVERNMENT, WHICH APPROVAL WAS TO BE GIVEN ONLY AFTER OBTAINING NO OB JECTION FROM THE POLLUTION DEPARTMENT . THE TRIBUNAL FURTHER OBSERVED THAT THERE WAS NO MATERIAL ON RECORD TO SHOW THAT ECO-TOURISM STATUS HAS BEEN GRANTED TO ANOTHER OTHER HOTEL AND WHICH STATUS ASSESSEE DOES NOT HAVE . THE CONCLUSION OF THE TRIBUNAL WAS THAT IN THE ABSENCE OF DEFINITION OF ECO- TOURISM THOUGH THE HOTEL IS ADDED INTO ITEM NO.15 O F PART-C IS TO BE 29 CONSTRUED TO BE HOTEL SITUATED IN THE STATE OF HIMA CHAL PRADESH OR THE STATE OF UTTRANCHAL HAVING VALID LICENCE ON THE BAS IS OF NO OBJECTION FROM THE POLLUTION DEPARTMENT WHICH CAN BE TREATED TO BE HOTEL ELIGIBLE FOR DEDUCTION UNDER SECTION 80IC OF THE ACT. SIMIL AR VIEW HAS BEEN HELD IN THE CASE OF M/S ANCHAL HOTELS (P) LTD. VS. ACIT IN ITA NOS.1800 & 1801/DEL;/2010 RELATING TO ASSESSMENT YEARS 2005-06 AND 2006-07 AND ITA NO.3637/DEL/2011 RELATING TO ASSESSMENT YEAR 20 07-08 VIDE ORDER DATED 7.10.2011. WE FURTHER FIND THAT THE SAME ASS ESSING OFFICER HAD HELD ANOTHER ENTERPRISE UNDER THE NAME OF STYLE OF M/S HOTEL LANDMARK AS ENTITLED TO THE BENEFIT OF THE DEDUCTION UNDER S ECTION 80IC OF THE ACT VIDE ORDER PASSED UNDER SECTION 143(3) OF THE ACT D ATED 7.4.2011. THE ASSESSING OFFICER WHILE PASSING THE SAID ORDER UNDE R SECTION 143(3) OF THE ACT IN THE CASE OF M/S HOTEL LANDMARK HAD HELD IT TO HAVE FULFILLED ALL THE CONDITIONS LAID DOWN UNDER SECTION 80IC REA D WITH SCHEDULE FOURTEEN OF THE INCOME TAX ACT. COPY OF THE SAID O RDER IS PLACED ON RECORD. 32. IN VIEW THEREOF AND FOLLOWING THE ABOVE SAID PA RITY OF REASONING WE FIND THAT THE FACTS OF THE CASE BEFORE US ARE ID ENTICAL TO THE FACTS BEFORE THE DELHI BENCH OF THE TRIBUNAL. THE ASSESS EE IN THE PRESENT CASE HAS RECEIVED CERTIFICATE FROM THE MINISTRY OF TOURI SM AND HAS ALSO A NO OBJECTION CERTIFICATE ISSUED BY THE POLLUTION CONTR OL BOARD, WHICH HAS NOT BEEN WITHDRAWN. IN VIEW THEREOF, THE ASSESSEE IS ENTITLED TO THE BENEFIT OF DEDUCTION UNDER SECTION 80IC OF THE ACT. 33. NOW COMING TO THE OBSERVATIONS OF THE CIT (APPE ALS) IN THE APPEAL RELATING TO ASSESSMENT YEAR 2008-09 VIS-A-VIS THE D EFINITION OF ECO- TOURISM ARE NOT CORRECT IN VIEW OF THE POLICY OF HI MACHAL PRADESH APPLICABLE TO THE STATE OF HIMACHAL PRADESH FOR THE PROMOTION OF ECO- TOURISM. THE UNDERLYING CONCEPT IS TO PROVIDE INFR ASTRUCTURE FOR THE 30 PROMOTION OF TOURISM AND IN ORDER TO PROMOTE THE SA ME, THE DEPARTMENT OF TOURISM IN THE STATE OF HIMACHAL PRADESH HAD FRA MED POLICY, UNDER WHICH RECOGNITION IS GIVEN SUBJECT TO FULFILLMENT O F CONDITIONS. THE ASSESSEE HAD MADE AN APPLICATION TO THE DEPARTMENT OF TOURISM FOR ITS RECOGNITION AS ECO-TOURISM UNDERTAKING OR ENTERPRI SES. THE ASSESSEE ADMITTEDLY HAD FULFILLED THE ABOVE SAID CONDITIONS AND ALSO RECEIVED NO OBJECTION CERTIFICATE FROM POLLUTION CONTROL BOARD FOR FULFILLING THEIR CONDITIONS AND NORMS. IN VIEW THEREOF, WHERE THE A SSESSEE HAD FULFILLED THE CONDITIONS OF THE STATUTE, IS TO BE HELD ELIGIB LE FOR THE BENEFIT OF DEDUCTION UNDER SECTION 80IC OF THE ACT. THE ABOVE SAID BENEFIT IS BY WAY OF SPECIAL PROVISION, PROVIDED UNDER THE ACT AN D ONCE THE ASSESSEE HAS FULFILLED THE CONDITIONS LAID DOWN UNDER THE SA ID SECTION, THE SAID DEDUCTION IS TO BE ALLOWED TO THE ASSESSEE. THE CI T (APPEALS) IN THE APPEAL RELATING TO ASSESSMENT YEAR 2008-09 HAD OBSE RVED THAT THE ASSESSEE WAS NOT ENTITLED TO THE BENEFIT OF DEDUCT ION UNDER SECTION 80IC OF THE ACT IN VIEW OF THE CERTIFICATE ISSUED BY THE POLLUTION CONTROL BOARD WHICH TALKS OF ITS VALIDITY UP TO 31.3.2004 I .E. EVEN BEFORE THE DATE OF EXPANSION CARRIED ON BY THE ASSESSEE. WE F IND THAT WHILE COMING TO THE SAID CONCLUSION THE CIT (APPEALS) HAS ERRED AS THERE ARE TWO CERTIFICATES ISSUED BY THE POLLUTION CONTROL BOARD. THE FIRST CERTIFICATE IS DATED 3.1.2004 AND VALIDITY OF THE SAID CERTIFIC ATE IS UP TO 31.3.2004. THE SECOND CERTIFICATE IS DATED 9.6.2004 AND IT IS IN FORCE FOR A PERIOD UP TO 31.3.2009. BOTH THE CERTIFICATES ARE FILED ON R ECORD. NOTHING HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO ESTABLISH THAT THE SAID CERTIFICATE DATED 9.6.2004 HAS BEEN WITHDRAWN BY TH E POLLUTION CONTROL BOARD. IN VIEW OF THE CONFUSION IN THE OBSERVATION OF THE CIT (APPEALS), WE FIND NO MERIT IN THE ORDER OF THE CIT (APPEALS) IN NOT ALLOWING DEDUCTION CLAIMED UNDER SECTION 80IC OF THE ACT REL ATING TO ASSESSMENT YEAR 2008-09. IN VIEW OF THE CERTIFICATE ISSUED BY THE DEPARTMENT OF 31 TOURISM AND NO OBJECTION CERTIFICATE DATED 9.6.2004 ISSUED BY THE POLLUTION CONTROL BOARD AND ALSO THE ASSESSEE HAVIN G FULFILLED THE CONDITIONS OF SUBSTANTIAL EXPANSION AND THE MEANING OF THE WORD ECO- TOURISM INCLUDING HOTEL UNDER ITEM 15 IN PART-C OF FOURTEEN SCHEDULE OF THE ACT, THE SPECIAL PROVISIONS PROVIDED BY THE S TATUTE FOR THE PROMOTION OF TOURISM IN THE STATE OF HIMACHAL PRADE SH, ENTITLES THE ASSESSEE TO THE CLAIM OF DEDUCTION UNDER SECTION 80 IC OF THE ACT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ALL OW THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT TO THE ASSE SSEE RELATING TO ASSESSMENT YEARS 2006-07, 2007-08 AND 2008-09. 33. IN THE RESULT, THE APPEALS OF THE REVENUE IN IT A NOS. 152 & 469/CHD/2010 ARE DISMISSED AND THE APPEAL OF THE AS SESSEE IN ITA NO.114/CHD/2010 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DAY OF JUNE, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 22 ND JUNE, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH