DCIT-13(3)(2), MUMBAI, MUMBAI vs. RIVA RESORTS PRIVATE LIMITED, MUMBAI

additions and therefore the Revenue Department being aggrieved is in appeal before us.

“1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing the expenses of Rs 12,45,309/- incurred on linens and mattresses as capital expenditure without appreciating the fact that the said expenditure is of capital in nature since the assets purchased are for enduring benefit.

2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Receipt of Share Capital from Shri Sachin Naik of Rs. 97,80,000/- as unexplained cash credit under section 68 on the basis of fresh evidence submitted by the assessee during the course of appellate proceedings and without giving enough time to the Assessing Officer to examine the fresh evidence and submit the remand report called for by CIT(A).

3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Disallowance of deduction u/s 80ID of Rs. 98,47,497/- ignoring the fact that the assessee's claim in A.Y. 2015-16 was dismissed by the CIT(A) as assesseee had opted for Vivad se Vishwas Scheme and not contested the addition made by AO.

4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Disallowance of deduction of Rs. 98,47,497/- under section 80ID of the Income Tax Act, 1961 without appreciating the fact that the assessee had filed Form 10CCBBA manually which is supposed to be file online.

7. The appellant prays that the order of the CIT(A)-NFAC, Delhi on the grounds be set aside and confirm the order of the AO.

8. The appellant craves leave to add, amend or alter all or any of the grounds of appeal

.” Coming to the 1st Ground of appeal

, we observe that the 6. Revenue Department has challenged the decision of the Ld. Commissioner in allowing the expenditure of Rs.12,45,309/- incurred on linen and mattress as revenue expenditure. In the financials, the Assessee had claimed this amount of Rs.12,45,309/- on account of linens and mattresses as “revenue in nature” and therefore the Assessee was show caused by the Assessing Officer (AO) as to why the said expenditure should not be considered as capital in the business of hotel industry as the linens and mattress items purchased are of enduring benefit. The Assessee in response, before the AO submitted that the said assets/expenditures are not of enduring benefits.

6.1 The AO not being impressed by the reply of the Assessee ultimately considered the amount of Rs.12,45,309/- incurred on linens and mattresses as “capital in nature” and after allowing proportionate depreciation @ 7.5% i.e. 50% of the depreciation @ 15% yearly basis, made the addition of Rs.11,51,911/- by holding as under:

“6.3 The submission of the assessee has been considered, however, I do not find any merit in it. Since the assessee is in the hotel business incurring of such huge expenditure on account of linen and mattresses gives the assessee enduring benefit and forms part of plant and machinery. Accordingly, the expenditure incurred is capital in nature and not revenue as claimed by the assessee. No hotel industry change the mattresses year after year and its life will not finish in a year as claimed by the assessee. Therefore, the use of such assets gives the assessee an enduring benefit and hence capital in nature. Accordingly, the claim of the assessee on purchase of mattress & linens totaling to Rs.12,45,309/- is capitalized by allowing 15% deprecation. Since the assessee has not provided the date of purchase of the same, I consider it that the same have been used below 180 days and accordingly 50% of deprecation i.e., 7.5% has been allowed. Accordingly, an addition of Rs.11,51,911/- [1245309 (7.5% of 1245309)] is made to the total income of the assessee. Thus, an addition of Rs. 11,51,911/- is made to the total income.”

6.2 On appeal, the Ld. Commissioner deleted the aforesaid addition by holding as under:

“The issue under this ground of appeal is whether the expenditure on linens and mattresses should be considered a revenue or capital expense. The concept of "enduring benefit" is crucial in making this determination. If expenditure provides a benefit that lasts beyond the current accounting period or offers a long-term advantage, it may be considered capital in nature. Conversely, if the expenditure is incurred for maintaining or running the business in the ordinary course and does not lead to the creation of a capital asset, it should be treated as revenue expenditure.

6.2 In the case of the Appellant, it is evident that linens and mattresses are integral to the hotel industry, where guest satisfaction plays a pivotal role in the success of the business. Clean and high-quality linens and mattresses are essential for guest comfort and the overall image of the hotel. Moreover, given the wear and tear these items are subject to and the need for frequent replacement, it is reasonable to conclude that this expenditure is recurring and necessary for maintaining service quality. As such, characterizing it as a one-time, capital expense is unfounded.

The reliance on the decision of the Hon'ble Supreme Court in the case of Empire Jute Co. Ltd. v. CIT 124 ITR 1 (SC) further supports the Appellant's argument. This decision emphasizes that even if an expenditure results in an advantage of enduring benefit, it may still be treated as revenue if it is incurred for the improvement of the existing business and does not create a new business for the assessee.

Additionally, the Appellant has cited precedent cases that affirm the treatment of similar expenses as revenue in nature, further strengthening their case.

6.3 In light of the above discussion and the principles of tax law, the expenditure of 12,45,309 incurred on linens and mattresses is, in fact, a revenue expenditure as it is essential for maintaining the day- to-day operations of a hotel and it's a routine cost incurred in the ordinary course of the hotel business.

The Appellant is granted the appropriate relief by allowing the deduction of 12,45,309 as a legitimate revenue expenditure. However, the relief of the depreciation at the rate of 7.5% on the same shall be added back.

Accordingly, the assessment order that treats this expenditure as capital in nature is set aside. This appellate deems it fit to allow the Appellant's grounds No.- 1 of appeal.”

6.3 The Revenue Department through Ld. D.R. agitated the deletion of the addition by the Ld. Commissioner mainly on the reason that the expenditure incurred qua linens and mattresses is enduring benefit and forms part of plant & machinery, as no hotel industry changes mattresses year after year and its life will not finish in a year as claimed by the Assessee, therefore the use of linens and mattresses gives the Assessee an enduring benefit and thus the same is liable to be treated as “capital in nature”.

6.4 On the contrary the Ld. A.R. refuted the claim of the Assessee.

6.5 We have given thoughtful considerations to the findings on the issue, arrived at by the authorities below and the rival contentions of the parties. We observe that in the case of Empire Jute Co. Ltd. vs. CIT 124 ITR (1)(SC), as quoted by the Ld. Commissioner in the impugned order, the Hon’ble Apex Court, has also dealt with the expenditure which was having enduring benefit and held as under: “that even if an expenditure results in an advantage of enduring benefit it may still be treated as revenue, if it is incurred for the improvement of existing business and does not create a new business for the Assessee”.

6.6 The Hon’ble Jurisdictional High Court in the case of Pr. Commissioner of Income Tax, Panaji vs. Goa Tourism Development Ltd. (2019) 102 taxmann.com 437 (Bom.) has also dealt with the expenditure incurred towards repairs and renovation of the hotel premises, wherein the Revenue Department has claimed that by incurring the expenditure towards repairs and renovation of the hotel the Assessee has brought into existence a new asset or in any case has secured a new advantage of an enduring nature and therefore required to be treated as “capital expenditure” but not the “revenue expenditure”. The Hon’ble Jurisdictional High Court by analyzing the claim of the parties and the relevant judgments on this context, ultimate treated the expenditure incurred towards dismantling Mangalore tiles, and laying laterite stones, laying plaster, plaster of paris and painting, waterproofing, replacement of tiles and plumbing as “revenue expenditure”.

6.7 We further observe that it is admitted fact that in the previous assessment years, the claim of the Assessee qua expenses incurred on linens and mattresses as “revenue in nature” has been accepted by the Revenue Department. It is also important to note herein that linens and mattresses are essential for maintaining day to day operations of hotel business and its routine cost incurred in the ordinary cost of the hotel business. The linens and mattresses are integral part of hotel industry, where guest’s satisfaction plays vital role in the success of business. Cleaning and high quality of linens and mattresses are essential for guests’ comfort and for the overall image of the hotel. ON the aforesaid analyzations, we are in agreement with the Ld. A.R. that the expenditure under consideration is recurring and necessary for maintaining service, quality etc. and therefore considering the same as one time “capital expense” is unfounded. Hence, on the aforesaid analysis, we are inclined not to interfere in the decision of the Ld. Commissioner in deleting the addition qua expenditure incurred for linens and mattresses. Consequently Ground no. 1 raised by the Revenue Department stands dismissed.

7.1 The AO therefore by considering the response of the Assessee observed that Shri Sachin Naik is the Director of the company however, no details qua his creditworthiness of advancing such huge sum by way of share capital has been filed. In the absence of any confirmation and bank statement of Shri Sachin Naik, the transaction of receipt of share capital cannot be verifiable. In the earlier years i.e. A.Y. 2016-17 the Assessee has shown receipt of unsecured loan from various parties including Shri Sachin Naik and therefore the then AO on noticing certain discrepancies qua receipt of loan from Shri Sachin Naik on account of non-reflection of entries in the bank statement vis-à-vis the ledger confirmation, treated the unsecured loans as unexplained and added the same to the total income of the Assessee.

7.2 In the year under consideration, though the Assessee has reported receipt of Rs.97,80,000/- by way of share capital from Shri Sachin Naik, however, no documents filed qua ledger confirmation, bank statement etc. to prove the genuineness of the transaction and the creditworthiness by merely stating that the share capital has been received from the Director Shri Sachin Naik, does not serve the purpose. It is upon the Assessee to prove the genuineness of the transaction by providing a relevant material to justify its claim which it failed to do so.

7.3 The AO ultimately by holding that though the identity of person can be verified, however, the genuineness of the transaction and the creditworthiness of the person have not been proved, therefore the receipt of share capital of Rs.97,80,000/- in the case of Shri Sachin Naik remains un-explained and therefore added to the total income u/s 68 of the Act.

7.4 The Assessee, being aggrieved, also challenged the addition in hand before the Ld. Commissioner and mainly claimed as under: “7.4 The Appellant in the submission stated that it has provided a comprehensive set of documents, including Mr. Sachin Naik's Income Tax Return Acknowledgment, which affirmed his participation in the transaction, and evidence of compliance with regulatory requirements of Registrar of Companies regarding the issuance of fresh equity share capital. Despite their diligent response, the Assessing Officer categorized the transaction as an unexplained cash credit. Further, appellant states that the Appellant's request for an extension to provide balance details, which was not accommodated by the Assessing Officer. This time constraint, the Appellant asserts, hindered their ability to submit certain bank statements and ledger confirmations, contributing to the Assessing Officer's decision.

7.5 The Appellant in their arguments also contended that the Assessing Officer had the option to issue a notice under Section 133(6) to Mr. Sachin Naik if additional information was needed to resolve doubts about the evidence. In this context, the Appellant references the case of Khandelwal Constructions v. CIT (227 ITR 900, Gauhati High Court), highlighting the necessity for proper inquiries and the rejection of the explanation provided by the Assessing Officer.”

7.5 Before the Ld. Commissioner submitted the comprehensive set of documents including income tax return acknowledgment which affirmed that Shri Sachin Naik has participated in the transaction and evidence of compliance with regularly requirements of Registrar of Companies regarding the issuance of fresh equity share capital etc. The Assessee further claimed that the Assessee requested the AO for an extension of time to provide details but was not accommodated by the AO. The time constraint hindered the ability of the Assessee to submit certain statements and ledger confirmations which are filed as an additional evidence under rule 46A of the Income Tax Rules, 1962 (in short “the Rules”).

7.6 Considering the aforesaid aspect, the Ld. Commissioner, in order to afford an opportunity to the Assessee, forwarded the additional evidence to the AO for necessary comments on or before 20.10.2023, however, no response was received from the AO therefore the Ld. Commissioner exercised its discretion to consider the submissions and consequently admitted the additional evidence under rule 46A of the Rules, as essential for the just decision of the case.

7.7 The Ld. Commissioner after carefully examining the ledger confirmation, HDFC bank statement, Union Bank of India bank statement of Shri Sachin Naik and by comparing corresponding bank entries in the Assessee’s books of accounts with the corresponding bank entries, which have been conducted through proper banking channels, ultimately found the addition made by the AO u/s 68 of the Act as un-justified and therefore deleted the same.

7.8 The Ld. D.R. before us mainly emphasized that the Assessee before the AO except establishing the identity failed to establish the genuineness of the transactions and the creditworthiness of Shri Sachin Naik and therefore the AO correctly made the addition. The Ld. D.R. further submitted that before admitting the additional evidence submitted by the Assessee before the Ld. Commissioner, no opportunity was afforded to the AO and therefore the addition is liable to be restored.

7.9 We have already observed above, that the Ld. Commissioner categorically noted in the impugned order that additional evidences submitted by the Assessee were forwarded to the AO for his comments supposed to be filed on or before 20.10.2023, however, the AO failed to file any response and therefore the Ld. Commissioner exercised his discretion as enshrined under rule 46 of the Act and consequently admitted the additional evidence and before making the decision on the issue in hand thoroughly examined the documents as well as the corresponding bank entries before deleting the addition, which goes to show that the decision of the Ld. Commissioner in deleting the addition was conscious, reasonable and under the facts and circumstances of the case and therefore no interference is warranted in the decision of the Ld. Commissioner on the issue in hand. Resultantly, Ground Nos. 2 stands dismissed.

8.1 In the previous assessment years 2015-16 and 2016-17, the claim of deduction u/s 80ID of the Act was rejected and therefore with this background the Assessee was asked by the AO to file detailed note on the claim under consideration.

8.2 In response, the Assessee before the AO mainly claimed that issue qua deduction claimed u/s 80ID of the Act is pending before the Ld. Commissioner. The Assessee in support of his claim filed similar details as filed in the earlier assessment years.

8.3 The AO though considered the claim u/s 80ID of the Act as claimed by the Assessee, however found the same not maintainable and accordingly rejected the same and disallowed the deduction to the tune of Rs.98,47,497/- u/s 80ID of the Act.

8.4 The Assessee challenged the said addition before the Ld. Commissioner, who allowed the claim of the Assessee and consequently deleted the addition under consideration, by holding as under:

“8. Ground No:3: Disallowance of deduction of 98,47,497/- under section 80ID of the Income Tax Act, 1961.

8.1 The Appellant raised Ground No: 3 in objection to the disallowance of the deduction of 98,47,497/- under Section 80ID of the Income Tax Act, 1961. The primary contention was that the Learned Assessing Officer erroneously relied on the assessments of previous years, specifically AY 2015-16 and AY 2016-17, to disallow the claimed deduction in the current assessment year. The appellant contention that the Learned Assessing Officer's approach, which heavily leaned on past assessments without adequately considering the specific circumstances of the current assessment year, is untenable. Each assessment year is an independent unit, and the eligibility for deductions under Section 80ID should be evaluated based on the facts and conditions of the relevant fiscal year.

8.2 Upon careful examination of the submissions, the Appellant has presented detailed responses to the concerns raised by the Assessing Officer, addressing each point of contention with documentary evidence and legal references. The discrepancies noted in the assessment order, including internal contradictions and cversight of crucial documents, have been highlighted in the submissions which are discussed in detailed as under;

8.3 Manual Filing of Form 10CCBBA, the appellant submitted that the act of not filing the form electronically should not undermine the right to claim the deduction. Comprehensive documentation was submitted, including a certificate from Chartered Accountants verifying compliance. Reference to the judicial decisions were cited, emphasizing substance over form (CIT vs. Jaideep Industries, CIT vs. Medicaps Ltd., CIT vs. Panama Chemical Works, CIT vs. Shivanand Electronics, CIT vs. Arunachalam, CIT vs. Jayant Patel)

8.4 2-Star Hotel Classification, during the assessment proceedings, the appellant presented a certificate from the Village Panchayat, Mandrem, Goa, explicitly designating the Hotel as a 2-star establishment. However, the appellant did not initially furnish a specific certificate from the Tourism Department. Subsequently, in the appellate proceedings and through a submission dated 05.10.2023 (referenced in para 3.11), the appellant provided the Certificate of "B" Category issued by the Department of Tourism, Government of Goa. Alongside this certificate, detailed payment records for the requisite fees from the fiscal years 2012-13 were also submitted, conclusively establishing the hotel's categorization as a "B" Category establishment.

8.5 In a subsequent submission dated 11.11.2023, the appellant further delineated the distinctions between the conditions set by the Ministry of Tourism, Government of India, for a 2-star category, and those mandated by the Department of Tourism, Government of Goa. The appellant argued that the conditions set by the Government of Goa are more stringent to attain the "B" Category than the 2-star category as per the Government of India's standards. The contention asserts that, despite procedural lapses, the appellant has met the conditions required for the 2- star category, and therefore, the disallowance of the deduction claim under Section 801D should not be warranted solely on procedural grounds.

8.6 During the assessment, concerns were raised by the Learned Assessing Officer regarding the Establishment Certificate, prompting a closer examination. Notably, the certificate, as outlined in para 4.2(iii) of the assessment order, indicates registration as a "Residential Hotel" on February 13, 2014, seemingly beyond the stipulated period in Section 80ID(iii) from 01/04/2008 to 31/03/2013. In paragraph 4.2(iv), the renewal date of 04.01.2007 implies an existence predating 01/04/2008. This internal contradiction questions the accuracy and consistency of the assessment process, lacking a clear, basis when scrutinized in light of our submissions.

8.7 The appellant on the above issued of para 8.6 made an argument that understanding the Establishment Certificate by the Labour Department is crucial. It primarily addresses operational aspects, not the inherent existence of the hotel. Clarifying to the Assessing Officer, we emphasized independent construction financed by the Bombay Mercantile Co-operative Bank. Despite providing detailed construction records, the Officer overlooked crucial verifications-funds borrowed, Occupancy certificate by the Panchayat, commencement certificate, approved building plan, and the Service tax certificate (07.11.2012). The Officer's denial, solely based on dates, disregards evidence establishing a separate unit's construction, operational since 02.05.2012, following Panchayat- issued Occupancy certificate. The assessment focused on dates, neglecting essential documents and unjustly disqualifying our deduction claim.

8.8 Utility Connections Clarification, the appellant, responding to the Assessing Officer's inquiry about water and electricity connections, clarified that though registered under the previous owner's name, they were in place before construction. The Officer dismissed this, overlooking the common practice in North Goa of hotels operating on properties owned by locals, focusing solely on connection names. The appellant emphasized the validity of concrete evidence like occupancy certificates, building plans, and specific tax registration for a residential hotel.

8.9 The appellant arguing against deeming hotels ineligible based on utility connection dates, the appellant highlighted the arbitrary nature of this criterion. They stressed the core intent of Section 80ID- to foster tourism in Goa-underscoring the Officer's failure to consider vital facts beyond business commencement, neglecting to verify the hotel's bona fide existence.

8.10 Further, contesting the Officer's reliance on the Certificate of Incorporation from 18.07.2003, the appellant argued it's legally flawed to determine pre-existence based solely on this. They urged the appellate authority to consider crucial documents-Occupancy Certificate, approved building plans, commencement certificate, sanction letter for borrowings, and specific tax registration over the Officer's disproportionate reliance on the Certificate of Incorporation.

8.11 The appellant's submissions have been reviewed and the points raised in the assessment order by the Learned Assessing Officer and have observed that, the appellant has effectively dismantled the foundation of the Learned Assessing Officer's disallowance of the 98,47,497 deduction under Section 80ID. The Officer's reliance on past assessments, without considering the unique circumstances of the current fiscal year, is untenable, as each assessment year stands independently. The appellant's meticulous responses, supported by comprehensive documentation, legal references, and substantial evidence, successfully debunked concerns over manual filing, hotel classification, Establishment Certificate inconsistencies, and utility connections.

8.12 The appellant effectively addressed concerns over the manual filing of Form 10CCBBA, providing a certificate from Chartered Accountants and citing relevant judicial decisions. Hotel classification discrepancies were resolved with a Department of Tourism certificate categorizing the hotel as "B" Category, backed by payment records. The Establishment Certificate's scrutiny revealed internal contradictions, emphasizing its operational nature. Clarifications on utility connections challenged arbitrary criteria, highlighting the construction of Hotel as the core purpose of Section 80ID in promoting tourism.

8.13 Further, in their submission dated 11.11.2023, the appellant elaborated on the deduction claimed under section 80IB(10) of the Act. They emphasized that if the assessee fails to meet specific conditions, the entire deduction under this section should not be disallowed. Relevant legal precedents were cited to support this argument, including i) Biswas Promotors Pvt. Ltd. v/s ACIT, [2013] 214 taxman 524; ii) CIT v/s Arun Exelo Foundation Pvt. Ltd., [2013] 212 taxman 342 (Mad.); iii) ITO v/s Paras Builders, 69 SOT 82. Additionally, reference was made to their jurisdictional Hon'ble Jurisdictional High Court in CIT v/s Bramha Associates, 333 ITR 289, where proportionate deduction was allowed even when certain conditions for claiming deduction under section 80IB(10) were not fully met.

8.14 In instance of the case and the appellant's compelling submissions and addressing the concerns raised by the Learned Assessing Officer, I find merit in the appellant's contentions. Therefore, the disallowance of the Rs.98,47,497 deduction under Section 80ID is deemed unwarranted. The Ground No 3 for addition of Rs.98,47,497 as a disallowance of deduction claimed under section 80ID is hereby allowed.”

8.5 We have given thoughtful considerations to the peculiar facts and circumstances of the case. The Ld. D.R. supported the order of the AO in making the addition under consideration. We observe that the AO made the addition under consideration mainly on the reason that in the previous assessment years i.e. A.Y. 2015-16 and 2016-17, identical deduction claimed u/s 80ID of the Act has been rejected and therefore the claim is not maintainable. The AO also noted the fact that the issue qua deduction claimed u/s 80ID of the Act is still pending before the Ld. Commissioner.

8.6 On the contrary the Assessee before us by producing the order dated 10.09.2022 passed by the then Ld. Commissioner/NFAC’s order for the A.Y. 2015-16 demonstrated that in that case the Assessee had opted for Vivad Se Vishwas Scheme (VSVS) and therefore the Assessee’s appeal was dismissed as withdrawn by the then Ld. Commissioner.

8.7. The Assessee by producing the order dated 23.01.2024 passed by the then Ld. Commissioner/NFAC’s, which pertains to A.Y. 2016-17 further demonstrated that the then Ld. Commissioner/NFAC’s has also dealt with the identical disallowance of Rs.61,02,483/- qua deduction claimed u/s 80ID of the Act and considering the NFAC’s decision dated 06.12.2023 relevant for the A.Y. 2017-18 in the case of the Assessee, ultimately allowed such claim, by holding as under:

“6. Ground No.-1: Disallowance of the Deduction claimed under section 80ID of the Act for 61,02,483:

6.1 The Appellant raised Ground No. 1 in objection to the disallowance of the deduction of 61,02,483 under Section 80ID of the Income Tax Act, 1961. The primary contention was that the Learned Assessing Officer erroneously relied on the assessments of the previous years, AY 2015-16, to disallow the claimed deduction in the current assessment year. The appellant contends that the Learned Assessing Officer's approach, which heavily leaned on past assessments without adequately considering the specific circumstances of the current assessment year, is untenable. Each assessment year is an independent unit, and the eligibility for deductions under Section 80ID should be evaluated based on the facts and conditions of the relevant fiscal year.

6.2 Further, the appellant also contested that the appellant claimed a deduction under Section 80ID, which was subsequently queried by the Assessing Officer through notices dated 18/08/2018 and 01/11/2018. The appellant submits that they have diligently responded to these queries on 7th December 2018. It was further stated that no additional "Show Cause Notice" was issued specifically challenging the Section 80ID deduction claim for the impugned assessment year (AY 2016-17). The appellant emphasizes the absence of an opportunity to present its case regarding the disallowance of the deduction, asserting a violation of the principles of natural justice. The reliance solely on the assessment of the previous fiscal year without a thorough examination of the current year's circumstances is deemed inadequate and in contravention of established legal principles.

The appellant's reliance on legal precedents, particularly the Supreme Court's judgment in Sahara India (Firm) Vs. Commissioner of Income-tax, wherein they underscore the necessity and importance of providing an opportunity for a pre- decisional hearing to an assessee, even in the absence of an express provision. Additionally, the appellant cites the case of Principal Commissioner of Income Tax Vs. Vilson Particle Board Industries Ltd., which invalidates decisions made without a pre-decisional hearing.

6.3 In addition to contesting the reliance on the disallowance made in the previous year without affording the opportunity for a hearing through a Show Cause Notice, the appellant has also submitted the order of NFAC CIT(A) AY 2017-18 through their submission dated 13/12/2023, wherein the appellant highlighted that the Commissioner at the National Faceless Appeal Centre (NFAC) allowed the grounds of appeal and accepted the contentions and detailed submissions provided in support of claiming the deduction under Section 80ID.

6.4. Upon careful examination of the Order of AY 2017-18, it has been noticed that the Appellant has presented detailed responses to the concerns raised by the Assessing Officer, addressing each point of contention with documentary evidence and legal references. The appellant adequately addressed concerns over the manual filing of Form 10CCBBA, providing a certificate from Chartered Accountants and citing relevant judicial decisions. Hotel classification discrepancies were resolved with a Department of Tourism certificate categorizing the hotel as "B" Category, supported by payment records. Scrutiny of the Establishment Certificate revealed internal contradictions, emphasizing its operational nature. Clarifications on utility connections challenged arbitrary criteria, highlighting the construction of the hotel as the core purpose of Section 80ID in promoting tourism.

6.5 Furthermore, according to the mentioned order, it has been noted that the appellant elaborated on the deduction claimed under section 80IB(10) of the Act. They emphasized that if the assessee fails to meet specific conditions, the entire deduction under this section should not be disallowed. Relevant legal precedents were cited to support this argument, including i) Biswas Promotors Pvt. Ltd. v/s ACIT, [2013] 214 taxman 524; ii) CIT v/s Arun Exelo Foundation Pvt. Ltd., [2013] 212 taxman 342 (Mad.); iii) ITO v/s Paras Builders, 69 SOT 82. Additionally, reference was made to their jurisdictional Hon'ble Jurisdictional High Court in CIT v/s Bramha Associates, 333 ITR 289, where proportionate deduction was allowed even when certain conditions for claiming deduction under section 801B(10) of the Act were not fully met.”

8.8 We have given thoughtful considerations to the peculiar facts and circumstances of the case and observe that the Ld. Commissioner not only thoroughly considered the parameters of section 80ID of the Act and the relevant facts and the documents submitted by the Assessee but also the order passed by the NFAC/Ld. Commissioner in the case relevant to A.Y. 2017-18 of the Assessee itself and therefore in our considered view the decision of the Ld. Commissioner in allowing the deduction claimed u/s 80ID of the Act does not suffers from any perversity, impropriety and/or illegality and therefore warrants not interference. Resultantly, the Ground Nos.3 & 4 raised by the Assessee qua issue under consideration stands dismissed.

10. Ground Nos.7 & 8 are formal in nature and therefore do not require any adjudication.

Order pronounced in the open court on 21.08.2024.