Shri Badri Vishal Agarwal, Almora V. ACIT, Nainital

ITA 5370/DEL/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7351 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 22-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Section: 143(3)

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI R.S. S YAL, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K. , JUDICIAL MEMBER ITA NO . 5370 / DEL / 2012 ASSESSMENT YEAR : 200 9 - 20 10 SHRI SH. BADRI VISHAL AGARWAL LAXMI AGENCIES, KARK HANA BAZAR, ALMORA - 263601 VS . ACIT, NAINITAL (APPEL LANT) (RESPONDENT) A SSESSEE BY : SHRI K.V.S. GUPTA, ADVOCATE DEPARTMENT BY: SHRI Y. KAKKAR, DR ORDER PER SHRI GEORGE GEORGE K , J M : 1. THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIRECTED AGAINST THE CIT(A) S ORDER DATED 04.09.2012. THE RELEVANT ASSESSMENT YEAR IS 2009 - 10. 2. THE GROUNDS RAISED READS AS FOLLOWS: - (I) THE ACTION OF THE LD. CIT(A) S IN NOT DIRECTING THE LD. ASSESSING OFFICER TO ALLOW D EDUCTION U/S 80IC OF RS.4,06,397/ - AS CLAIMED IN THE INCOME TAX RETURN IS ILLEGAL, ARBITRARY, UNWARRANTED, UNCALLED FOR & AGAINST THE FACTS & CIRCUMSTANCES OF THE CASE. (II) THE ACTION OF THE LD. CIT(A) S IN CONFIRMING THE ACTION OF THE LD. A.O. IN HOLDING THAT THE HOTEL OF THE ASSESSEE DOES NOT FULFILL THE INTENTION OF THE LEGISLATURE AND HENCE, NOT ELIGIBLE FOR DEDUCTION OF THE PROFITS U/S 80IC IN RESPECT OF THE ACTIVITY OF ECO - TOURISM IS ILLEGAL, ITA NO.5370/DEL /2012 ASSESSMENT YEAR : 2009 - 2010 2 ARBITRARY, UNWARRANTED, UNCALLED FOR & AGAINST THE FACTS & CIRCUMSTANCES OF THE CASE. (III) THE ACTION OF THE LD. CIT(A),S IN NOT APROVIDING SUFFICIENT OPPORTUNITY FOR THE APPELLANT AND DECIDING THE APPEAL EX - PARTE IS ILLEGAL, ARBITRARY UNWARRANTED, UNCALLED FOR & AGAINST THE FACTS & CIRCUMSTANCES OF THE CASE. (IV) THE APPELLANT RESERVE THE RIGHT TO ADD/ALTER/MODIFY/ AMEND OR WITHDRAW ANY GROUND OF APPEAL. 3. BRIEFLY STATED THE FACTS ARE AS FOLLOWS. THE ASSESSEE, AN INDIVIDUAL IS A PROPRIETOR OF HOTEL/RESORT. THE ASSESSEE FILED RETURN FOR THE ASSESSMENT YEAR UNDER DISPUTE ON 23.09.2009 AFTER CLAIMING DEDUCTION U/S 80IC OF THE I.T. ACT, 1961 AMOUNTING TO RS.4,06,397/ - , BEING 25% OF THE NET PROFIT OF RS.16,25,589/ - FROM THE RESORT BUSINESS. THE ASSESSEE WAS ASKED TO JUSTIFY THE CLAIM OF DEDUCTION U/S 80IC OF THE ACT. THE ASSESSEE S COUNSEL APPEARED BEFORE THE A.O. AND FILED WRITTEN SUBMISSION S. THE SUBMISSION OF THE ASSESSEE WAS REPRODUCED AT PAGES 2 & 3 OF THE ASSESSING OFFICER S ORDER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AN INSPECTOR ATTACHED TO THE AS SESSING OFFICER WAS DEPUTED TO VERIFY THE CLAIM OF THE ASSESSEE . THE INSPECTOR SUBMITTED HIS REPORT. THE GIST OF THE REPORT SUBMITTED TO THE ASSESSING OFFICER IS REPRODUCED BELOW: - (I) RESORT IS BASICALLY A STAND - ALONE HOTEL USED BY THE TOURISTS FOR LODGI NG. NO ACTIVITY WORTH ITS NAME IS BEING ORGANIZED BY THE HOTEL TO PROMOTE ECO - TOURISM. THERE IS ALSO A CONFERENCE HALL AND IT IS BEING USED FOR VARIOUS FAMILY CEREMONIES. (II) THERE IS NO PLANT, MACHINERY OR EQUIPMENTS FITTED FOR RAIN WATER HARVESTING. ITA NO.5370/DEL /2012 ASSESSMENT YEAR : 2009 - 2010 3 (II I) FROM INSPECTION OF ROOMS AND COMPOUND OF THE RESORT, NO SEPARATE DUSTBINS WERE FOUND FOR SEPARATION OF WASTE MATERIALS IN BIO DEGRADABLE OR NON - BIODEGRADABLE CATEGORIES. (IV) THOUGH SOLAR PAN ELS WERE INSTALLED THERE BUT IT IS BEING USED ONLY FOR HOT WA TER SUPPLY, NORMAL EQUIPMENT USED IN ALL HOTELS IN THE HILLS. 3.1 . THE ASSESSING OFFICER AFTER CONSIDERING THE SUBMISSIONS OF THE COUNSEL , VARIOUS DOCUMENTS FURNISHED DURING THE COURSE OF ASSESSMENT AND THE REPORT OF THE ITI, HELD THAT THE ASSESSEE WAS N OT ENTITLED TO DEDUCTION U/S 80IC OF THE ACT. THE RELEVANT OBSERVATION OF THE ASSESSING OFFICER IN DENYING THE BENEFIT OF DEDUCTION U/S 80IC READS AS FOLLOWS: - IT IS IMPORTANT TO MENTION HERE THAT THE LEGISLATURE HAS BEEN CARVED OUT TO PROVIDE INCENTIVE I N FORM OF DEDUCTION OF THE PROFITS U/S 80IC IN RESPECT OF THE ACTIVITY OF ECO - TOURISM AND NOT IN RESPECT OF THE COMMERCIAL PROFITS EARNED FROM THE OPERATION OF STAND - ALONE HOTELS OR RESORTS. THAT IS TO SAY, EVEN WHERE A HOTEL USES ALL ECO - FRIENDLY MEASUR ES IT DOES NOT GET ENTITLED TO DEDUCTION U/S 80IC IF IT HAS NOT BEGUN AS A COMPONENT OR PART AND PARCEL OF ECO - TOURISM ACTIVITY/PROJECT. IN THE INSTANT CASE, THE RESORT IS ALSO BEING USED FOR ORGANIZING BUSINESS MEETINGS AND OTHER FAMILY CEREMONIES. IT D OES NOT ORGANIZE ANY CUSTOMIZED PACKAGES FOR TOURISTS INVOLVING ANY ACTIVITY WITHIN THE MEANING OF ECO - TOURISM . THE HOTEL IS LACATED IN ALMORA, A BUSTLING & IMPORTANT DISTRICT TOWN OF KUMOAN HILLS I.E. IT IS NOT LOCATED IN ANY UNSPOILED ENVIRONMENT. IT I S IMPORTANT PLACE OF BUSINESS AND INDUSTRY. THUS, IT IS EVIDENT THAT THIS RESORT DOES NOT HAVE THE COMPONENT OF ECO - TOURISM. THUS IT IS EVIDENT THAT THE HOTEL BUSINESS OF THE ASSESSEE DOES NOT FULFILL THE INTENT OF THE LEGISLATIVE AND HENCE, NOT ELIGIBLE OF DEDUCTION OF THE PROFITS U/S 80IC IN RESPECT OF THE ACTIVITY OF ECO - TOURISM . THEREFORE, DEDUCTION U/S 80IC OF THE I.T. ACT, 1961 CLAIMED BY THE ASSESSEE IS HEREBY DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 4 . THE ASSESSEE BEING AGGRIEVED FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE CIT(A) PASSED AN EX - PARTE ORDER SINCE THE ASSESSEE S COUNSEL ITA NO.5370/DEL /2012 ASSESSMENT YEAR : 2009 - 2010 4 SOUGHT ADJOURNMENT ON SEVERAL OCCASIONS WHEN THE CASE WAS POSTED FOR HEARING. THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER IN DENYING THE BENEFIT OF DEDUCTION U/S 80IC OF THE ACT. 5 . THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE FILED A PAPER BOOK COMPRISING OF 21 PAGES INTER ALIA ENCLOSING COPIES OF COMPUTATION OF INCOME FOR TH E RELEVANT ASSESSMENT YEAR S ALONG WITH AUDITED BALANCE SHEET , COPIES OF ADJOURNMENT S APPLICATIONS MOVED BY THE COUNSEL BEFORE THE CIT(A) AND COPIES OF ASSESSMENT ORDER S PASSED U/S 143(3) FOR THE A.Y. 2004 - 05 AND A.Y. 2006 - 07. IT WAS SUBMITTED BY THE LD. CO UNSEL THAT FOR A.YS. 2004 - 05 AND 2006 - 07 SCRUTINY ASSESSMENT YEAR WAS COMPLETED U/S 143(3) OF THE ACT AND ASSESSEE WAS GRANTED BENEFIT OF DEDUCTION U/S 80IC OF THE ACT. IT WAS SUBMITTED THAT THE FACTUAL SITUATION FOR THE CURRENT ASSESSMENT YEAR IS IDENTICAL TO THE F ACTS IN THE PREVIOUS ASSESSMENT YEAR S NAMELY 2004 - 05 AND 2006 - 07 AND THEREFORE A.O. IS NOT JUSTIFIED IN DENYING DEDUCTION U/S 80IC OF THE ACT . 6 . THE LD. D.R. SUPPORTED THE ORDERS OF THE INCOME TAX AUTHORITY. 7 . WE HAVE HEARD RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE HAS BEEN CLAIMING DEDUCTION U/S 80IC OF THE ACT FROM A.Y. 2004 - 05 ON WARDS, IN RESPECT OF INCOME DERIVED FROM HIS RESORT BUSINESS. THE ASSESSEE WAS GRANTED DEDUCTION U/S 80IC OF THE ACT FOR A.YS. 2004 - 05 AND 2006 - 07 IN SCRUTINY ASSESSMENTS COMPLETED U/S 143(3) VIDE ORDERS DATED 30.03.2006 AND ITA NO.5370/DEL /2012 ASSESSMENT YEAR : 2009 - 2010 5 30.09.2008 RESPECTIVELY. IN CURRENT ASSESSMENT YEAR FOR DENYING THE BENEFIT OF DEDUCTION U/S 80IC OF THE ACT, THE ASSESSING OFFICER HAD RELIED UPON THE REPORT OF INCOME TAX INSPECTO R. THIS REPORT OF THE INCOME TAX INSPECTOR WAS NOT DISCLOSED TO THE ASSESSEE FOR HIS REBUTTAL. MOREOVER, THE CIT(A) HAS PASSED AN EX - PARTE ORDER . T HEREFORE, IN THE INTEREST OF JUSTICE AND EQUITY , WE ARE OF THE VIEW THAT THE ASSESSEE SHOULD BE GIVEN ONE MOR E OPPORTUNITY TO PRESENT HIS CASE BEFORE THE CIT(A). HENCE IMPUGNED ORDER OF THE CIT(A) IS SET ASIDE AND THE MATTER IS RESTORED TO THE CIT(A) FOR DE NOVO CONSIDERATION. THE ASSESSEE SHALL COOPERATE FOR EXPEDITIOUS DISPOSAL OF THE MATTER BEFORE THE CIT(A). HE OR HIS COUNSEL SHALL BE PRESENT BEFORE THE CIT(A) ON DATES FIXED FOR HEARING AND SHALL NOT SEEK ADJOURNMENT WITHOUT ANY VALID REASONS . IT IS ORDERED ACCORDINGLY. 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . TH E DE CISION WAS PRONOUNCED IN THE OPEN COURT ON 9 TH OCTO BER, 201 4 . SD/ - SD/ - ( R.S. SYAL ) (GEORGE GEORGE K.) A CCOUNTANT MEMBER J UDICIAL MEMBER DATED: 9 TH OCTOBER , 201 4 . AKS/ - COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI