Shri Chottey Lal Gupta, Roorkee V. ITO, Roorkee

ITA 568/DEL/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4249 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 31-08-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 03-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVIKANT GUPTA
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC : NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO.568/DEL/2016 ASSESSMENT YEAR : 2010-11 SH. CHHOTEY LAL GUPTA, C/O M/S HEMANT ARORA & CO, LLP, CHARTERED ACCOUNTANTS, 354B, 30, CIVIL LINES, ROORKEE 247667 (PAN: ACFPG2028P) VS. ITO, WARD-1, ROORKEE (APPELLANT) ( RESPONDENT) ASSESSEE BY : SH. SOMIL AGGARWAL, ADV. & SH. DEEPESH DEPARTMENT BY : SHRI RAVI KANT GUPTA, SR. DR. ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A), DEHRADUN ON 24.11.2015 IN RELATION T O THE ASSESSMENT YEAR 2010-11. 2. THE GROUNDS RAISED IN ASSESSEES APPEAL READ AS UNDER:- 1. THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW THE IMPUGNED ORDER PASSED UNDER SECTION 250(6) OF THE INCOME TAX ACT, 1961 BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), DEHRADUN IS BASED ON CONJECTURES, SURMISES, ASSUMING INCORRECT FACTS AND INCORRECT APPLICATION OF LAW. 2 2. THAT THE LD. CIT (A) HAS ERRED FOR NOT CONSIDERING THE RESTAURANT AS A PART AND PARCEL OF HOTEL AND CONSIDERING IT AS A DISTINCT ENTITY FROM HOTEL AND FOR THIS REASON NOT ELIGIBLE TO CLAIM DEDUCTION U/S 80LE ON ACCOUNT OF THE FACT THAT IT DOES NOT FALL UNDER THE NIC CLASSIFICATION 55101, TO WHICH THE EXEMPTION HAS BEEN PROVIDED. 3. THAT THE APPELLANT HAD CLAIMED DEDUCTION U/S 80 IC ON HOTEL PREM DYNASTY SINCE A. Y. 2005-06, ON HOTEL DYNASTY SINCE A. Y. 2006-07 AND WHERE AS THE HOTEL PREMANSH SINCE A. Y. 2008-09. SINCE VERY BEGINNING THE CASES HAVE BEEN COMPLETED UNDER SCRUTINY AND DEDUCTION U/S 80IC HAS BEEN CLAIMED AND ACCEPTED BY THE DEPARTMENT ON ALL THE THREE HOTELS. BUT IN A.Y. 2009-10, ON THE INSTRUCTION OF HIGHER AUTHORITIE S THE DEDUCTION WAS DENIED BY THE A.0., FURTHER ON APPEAL TO HONBLE INCOME TAX APPELLATE TRIBUNAL THE SAME WAS FULLY ALLOWED VIDE APPEAL ORDER FOR THE A. Y. 2009-10 DATED 11.11.2015. 4. THAT ON THE FACTS OF THE CASE AND IN LAW THE LEARNED CIT (A) HAS ERRED BY NOT CONSIDERING THE CLAIM OF 80LE FOR RS 9,09,587/- IN RESPECT OF HOTEL DYNASTY. 3 5. THERE IS NO BASIS TO DENY THE APPELLANT THE BENEFIT OF DEDUCTION U/S 80LC, THE APPELLANT HAVING DULY SATISFIED THE THRESHOLD CONDITIONS FOR AVAILING THE SAID DEDUCTION. 6. THAT THE APPELLANT CRAVES FOR RIGHT TO AMEND /MODIFY/DROP OR ADD TO THE ABOVE GROUNDS OF APPEAL. 7. THE ABOVE GROUNDS OF APPEAL ARE INDEPENDENT OF EACH OTHER. 8. DETAILED WRITTEN SUBMISSIONS AND STATEMENT OF FACTS SHALL BE FILED AT THE TIME OF HEARING OF THE APPEAL. 3. THE FACTS NARRATED BY THE REVENUE AUTHORITIES ARE N OT DISPUTED BY BOTH THE PARTIES, HENCE, THE SAME ARE NOT REPEATED HERE FOR THE SAKE OF BREVITY. 4. LD. COUNSEL OF THE ASSESSEE REITERATED THE CONTENTION S RAISED IN THE GROUNDS OF APPEAL AND STATED THAT THE ASSESSEE HAD CLAIM ED DEDUCTION U/S 80IC ON HOTEL PREM DYNASTY SINCE A. Y. 2005-06, ON HO TEL DYNASTY SINCE A.Y. 2006-07 AND WHERE AS THE HOTEL PREMANSH SINCE A. Y. 2008-09. IT WAS FURTHER STATED THAT SINCE VERY BEGINNING THE CASES HAVE B EEN COMPLETED UNDER SCRUTINY AND DEDUCTION U/S 80IC HAS BEEN CLAIMED AN D ACCEPTED BY THE DEPARTMENT ON ALL THE THREE HOTELS. BUT IN A.Y. 2009-10, ON THE INSTRUCTION OF HIGHER AUTHORITIES THE DEDUCTION WAS DEN IED BY THE A.0., FURTHER ON APPEAL TO INCOME TAX APPELLATE TRIBUNAL T HE SAME WAS FULLY 4 ALLOWED VIDE APPEAL ORDER FOR THE A. Y. 2009-10 DAT ED 11.11.2015. HE FURTHER STATED THAT THERE IS NO BASIS TO DENY THE ASSESSEE THE BENEFIT OF DEDUCTION U/S 80LC, THE ASSESSEE HAVING DULY SATISFIED THE THRESHOLD CONDITIONS FOR AVAILING THE SAID DEDUCTION. 5. ON THE OTHER HAND, LD. D.R. STATED THAT THE ISSUE I NVOLVED IN THE ABOVE MENTIONED CASE WAS THAT AS TO WHETHER THE ASSESSEE IS ENTITL ED FOR DEDUCTION U/S 80-IC OR NOT AS A WHOLE; AND ALSO AS TO WHETHER T HE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80-IC ON THE INCOME OF RESTAURANT. IN RESPECT OF FINDINGS OF ITAT GIVEN IN PARA 4 OF THE ORDER AND AS MENTIONED A BOVE, IT IS SUBMITTED THAT IN THE ASSESSMENT ORDER FOR A Y 2009-10, DISALLOWAN CE OF DEDUCTION U/S 8O-IC ON THREE UNITS OF THE ASSESSEE WERE MADE CONSIDERIN G ALL THE UNITS AS HOTEL AND BEING INELIGIBLE FOR SECTION 8O-IC; WHEREAS DURING A Y 2010-11, IT WAS SPECIFICALLY BROUGHT OUT ON RECORD AND IN THE ASSESSMENT ORDER TOO THAT ONE UNIT OF THE ASSESSEE M/S. HOTEL DYNASTY WAS A RESTAURANT ONLY AND NOT A HOTEL AND SEPARATELY RUNNING FROM OTHER TWO UNITS. HEN CE, THE FACTS WERE NOT IDENTICAL AS SUCH. 5.1 IT WAS FURTHER STATED THAT RECENTLY, THE HON'BLE HIG H COURT OF UTTARAKHAND AT NAINITAL, IN INCOME TAX APPEAL NO. 09 ;10 AND 11 OF 2012 IN THE CASE OF CIT, DEHRADUN VS. AANCHAL HOTELS PVT. LTD. A ND OTHERS HAS CONSIDERED THE ISSUE AND LAID DOWN CERTAIN PRINCIPLES OF LAW FOR ADMISSIBILITY OF DEDUCTION U/S 8O-IC TO THE HOTELS LOCATED IN THE STA TE OF UTTARAKHAND AND IN VIEW OF THE AFORESAID DECISION OF THE HONBLE HIGH C OURT, THE CASE OF THE ASSESSEE DOES NOT FALL WITHIN THE AMBIT OF THE PRINCIPLES OF LAW LAID DOWN BY 5 THE HON'BLE HIGH COURT AND ALSO DOES NOT FULFILL THE CON DITIONS FOR THE ADMISSIBILITY OF DEDUCTION U/S 80-IC. THEREFORE, HE R EQUESTED THAT THE ISSUE IN DISPUTE MAY BE SET ASIDE TO THE FILE OF THE AO, BECA USE THE HONBLE HIGH COURT OF UTTRAKHAND AS WELL AS ITAT IN MANY CASES HAS SET ASIDE THE SIMILAR ISSUE IN DISPUTE TO THE AO. IN SUPPORT OF HIS CONTENTION , HE FILED THE COPY OF THE ORDER OF THE HONBLE UTTRAKHAND HIGH COURT IN T HE CASE OF CIT, DEHRADUN VS. ANCHAL HOTELS PVT. LTD. REPORTED IN 287 CTR 233 WHE REBY THE MATTER WAS REMANDED BACK BY THE HONBLE HIGH COURT TO THE FILE OF AO, WHO WILL AFFORD OPPORTUNITY TO ALL THE ASSESSES AND PASS FRESH ORDERS TAKING NOTE OF THE+ OBSERVATIONS WHICH WERE MADE BY THE HONBLE HIGH COURT OF UTTRAKHAND. 5.2 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE LEVANT RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AND TH E ORDER OF THE HONBLE HIGH COURT OF UTTRAKHAND IN THE CASE OF CIT VS. ANCHAL HO TELS PVT. LTD. (SUPRA). WE FIND THAT THE HONBLE HIGH COURT OF UTTRA KHAND IN THE AFORESAID CASE VIDE PARA NOS. 33 TO 38 HAS HELD AS UNDER:- 33. WE ARE OF THE VIEW THAT IT IS NOT THE INTENTION OF THE LEGISLATURE THAT ANY PERSON WHO SETS UP A HOTEL WITHIN THE TIME LIMITS INDICATED IN THE STATE OF UTTARAKHAND, WI THOUT ANY REGARD TO THE EXACT LOCATION, AND THE MANNER IN W HICH IT OPERATES, ITS IMPACT ON THE NATURE (ENVIRONMENT), ITS RELATIONSHIP WITH THE LOCAL PEOPLE (LOCAL COMMUNITY), W HAT IT DOES FOR THE PEOPLE THERE, INDISCRIMINATELY, ALL SUCH HOTELS SHOULD BE ENTITLED TO CLAIM THE BENEFIT. IT IS TRUE THAT THE WORD 'ECOTOURISM' INCLUDES HOTELS AMONG OTHER ACTIVITIES. WE WOULD THINK THAT IN THE CONTEXT OF THIS CASE, WE WOULD NOT BE UNJUSTIFIED IF WE INTERPRET THE WORD 'HOTEL' TAKING COLOR AND ASSISTANCE FROM THE WORD 'ECOTOURISM'. 6 THE WORD 'ECOTOURISM', IT MUST BE NOTED, APPEARS AT THE BEGINNING OF THE PROVISION. OBVIOUSLY CONFRONTED WITH THE OBSTACLE IT CAUSES TO THE ACCEPTANCE OF THE RESPONDENTS ARGUMENT, MIMANSA PRINCIPLES INVOKED IN THE DECISION O F ISPAT'S CASE ARE RELIED ON BY SHRI PULAK RAJ MULLICK. W E HAVE ALREADY EXTRACTED THE RELEVANT PASSAGE. EVEN APPLYING THE MIMANSA PRINCIPLES, WE ARE AT A TOTAL L OSS AS TO HOW ANY ASSISTANCE WOULD BE DERIVED FROM THE PRINCI PLES LAID DOWN IN THE MIMANSA PRINCIPLE OF INTERPRETATION. THE ARGUMENT APPEARS TO BE THAT SUBORDINATE ACCESSORY MUST BE RENDERED SUBSERVIENT TO THE PRINCIPLE. THERE CAN BE NO QUARREL WITH THE SAME BUT THAT INVOLVES AN ANSWER TO T HE QUESTION WHICH IS THE PRINCIPLE. IN FACT, THE ACCEPTANCE O F THE ASSESSEE'S ARGUMENT WOULD RENDER IT NECESSARY FOR US TO DELETE THE WORD 'ECO'. 34. WE WOULD THINK THAT NEITHER THE BLUE PENCIL THEO RY NOR THE MIMANSA THEORY CAN BE OF ANY ASSISTANCE TO THE ASSESSEE. THE BLUE PENCIL THEORY IS PREMISED ON THE PRINCIPLE OF SEVERANCE AND IT IS TRUE THAT IT IS EVOLVE D TO SEPARATE THAT WHICH IS ILLEGAL FROM THAT WHICH WOULD P ASS MUSTER. IN SUCH CIRCUMSTANCES, IT IS AT THE HEART OF THE DOCTRINE OF SEVERABILITY. WE CAN HAVE NO QUARREL WITH THE SAID PRINCIPLES, BUT ITS APPLICATION TO THE FACTS OF THI S CASE IS TOTALLY WITHOUT FOUNDATION WHEN THE LEGISLATURE HA S DELIBERATELY INTENDED ECOTOURISM TO BE AT THE HEART OF ITS DECISION TO GIVE A DEDUCTION. WE ARE AT A LOSS AS TO HOW IT CAN BE ITSELF DONE AWAY IN ORDER TO PROVIDE FOR DEDUCT ION TO A HOTEL, WHICH IS MERELY ENGAGED IN TOURISM AND NOT ECOTOURISM. IN OTHER WORDS, WE ARE OF THE VIEW THAT I N THE 7 SETTING IN WHICH ENTRY 15 OF 14TH SCHEDULE APPEARS, IT SHOULD YIELD THE FOLLOWING RESULT. ONLY HOTELS, WHICH WERE SET UP AS ECOTOURISM UNITS OR HAVING SET UP AS ECOTOURISM OR UNITS, WERE EXPANDED AS SUCH, WOULD BE ENTITLED TO THE BENEFIT OF 80-IC. WE WOULD THINK THAT THE SOUL OF TH E PROVISION IS ECOTOURISM. VARIOUS FORMS, IN WHICH ECOTOURISM MAY BE PRACTISED AND OPERATED, ARE ENUMERATED AFTER THE GENERAL WORD 'ECOTOURISM'. THE ACTIVITIES MENTIONED SPECIFICALLY MUST SHARE ONE COMMON FEATURE, I.E., THEY MUST BE PURSUED AS PART OF ECOTOURI SM. THIS IN OUR HUMBLE VIEW IS THE INTERPRETATION, WHICH WOULD DO JUSTICE TO THE WORDS, THE CONTEXT AND OBJECT OF THE STATUTE. CERTAINLY, THE MERE PROCUREMENT OF A NO OBJE CTION FROM THE POLLUTION CONTROL BOARD CANNOT BE DETERMINA TIVE OF A QUESTION, WHETHER THE HOTEL FULFILS THE REQUIREM ENT UNDER SECTION 80-IC OF THE ACT. MAY BE, IT IS NOT IN DISPUTE, IN FACT, ACCORDING TO SHRI PULAK RAJ MULLICK THAT FOR ALL HOTELS OF A PARTICULAR TYPE, SATISFYING A PARTICULAR REQUIREMENT, NO OBJECTION IS REQUIRED FROM THE POLLUT ION CONTROL BOARD. IN THIS CONTEXT, WE BEAR IN MIND THE ARGUMENT OF SHRI H.M. BHATIA, THAT POLLUTION CONTROL BOARD ACTUALLY GIVES NO OBJECTION CONSENT TO OPERATE IN THE CONTEXT OF AIR AND WATER POLLUTION. BY NO MEANS, CAN THIS BE THE SOLE DETERMINANT OF THE QUESTION, AS TO WHETHER THE HOTEL IS ENGAGED IN ECOTOURISM. 35. THEREFORE, NECESSARILY THE ORDER PASSED BY THE TRIBU NAL CANNOT BE SUSTAINED. THE RECEIPT OF THE SUBSIDY CANNOT BE A HURDLE IN OUR TAKING THE VIEW, WHICH WE ARE TAKIN G AS WE ARE CALLED UPON TO DECIDE THE ACTUAL SCOPE OF THE PROVI SION 8 IN THIS APPEAL. WHILE WE DO NOT DISCOUNT THE FACT THA T SUBSIDY MAY HAVE BEEN GIVEN THE ACTUAL INTERPRETATION OF THE PROVISION IS A TASK, WHICH WE CANNOT ABDICATE. 36. EVEN REGARDING THE SITES OF THE ACTIVITIES, WE WOU LD THINK THAT IT MUST HAVE SOMETHING TO DO WITH AREAS CLO SE TO NATURE. NO DOUBT, IN THE STATE OF UTTARAKHAND, THE AREA OF NATURAL BEAUTY AND AREAS CLOSE TO NATURE, OFTEN OVERLA PPED IN CLOSE PROXIMITY WITH DEVELOPED AREAS. THESE ARE ALL MATTERS WE WOULD LEAVE TO THE AUTHORITY. IN VIEW OF THE SAME, THE ORDER OF THE TRIBUNAL CANNOT BE SUSTAINED AND THE MATTER MUST BE REDONE. ACCORDINGLY, THE IMPUGNED ORDERS IN ALL THESE CASES WILL STAND SET ASIDE. A REQUEST IS MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT IF THE MATTER IS SET ASIDE AND REMANDED, IT BE REMANDED NOT T O THE TRIBUNAL BUT TO THE ASSESSING OFFICER. LEARNED COUNSE L FOR THE REVENUE MR. H.M. BHATIA DOES NOT OBJECT TO TH IS COURSE OF ACTION. IN SUCH CIRCUMSTANCES, IN VIEW OF THE FACT THAT THE MATTER MUST BE REDONE, WE SET ASIDE THE IMPUGNED ORDERS. THE MATTER IS REMANDED BACK TO THE ASSESSING OFFICER, WHO WILL AFFORD OPPORTUNITY TO ALL TH E ASSESSEES AND PASS FRESH ORDERS TAKING NOTE OF THE OBSERVATIONS, WHICH WE HAVE MADE. 37. THE ANSWER TO THE SUBSTANTIAL QUESTION OF LAW NO.1 IS GIVEN IN FAVOUR OF THE REVENUE/APPELLANT BY HOLDING THAT MERELY BECAUSE A NO OBJECTION CERTIFICATE HAS BEEN OBTAINED FROM THE POLLUTION CONTROL BOARD, THE CONDI TIONS UNDER SECTION 80-IC WILL NOT BE FULFILLED. 38. IN VIEW OF THE ABOVE, THE APPEALS STAND DISPOSED O F. 9 5.3 AFTER CAREFULLY PERUSING THE DECISION OF THE HONBL E HIGH COURT OF UTTRAKHAND, WE SET ASIDE THE ISSUE IN DISPUTE TO THE FIL E OF THE AO WITH THE DIRECTIONS TO RE-DECIDE THE ISSUE IN DISPUTE ON THE ANVI L OF HONBLE UTTRAKHAND HIGH COURT DECISION IN THE CASE OF CIT VS. A NCHAL HOTELS PVT. LTD. (SUPRA). 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED ON 24/04/2018. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE 24/04/2018 SRBHATNAGAR COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES