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Income Tax Appellate Tribunal, DELHI BENCHES : SMC : NEW DELHI
Before: SHRI H.S. SIDHU
ORDER This appeal filed by the assessee is directed against the order passed by the CIT(A), Dehradun on 24.11.2015 in relation to the assessment year 2010-11.
The grounds raised in Assessee’s Appeal read as under:-
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. 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 authorities the deduction was denied by the A.0., further on appeal to Hon’ble Income Tax Appellate Tribunal the same was fully allowed vide Appeal order for the A.
Y. 2009-10 dated 11.11.2015.
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. 2
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.
The above grounds of appeal are independent of each other.
Detailed written submissions and statement of facts
shall be filed at the time of hearing of the appeal.
The facts narrated by the revenue authorities are not 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 contentions raised in the grounds of appeal and stated that the assessee had claimed deduction u/s 80IC 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. It was further stated that 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 authorities the deduction was denied by the A.0., further on appeal to Income Tax Appellate Tribunal the same was fully 3 allowed vide Appeal order for the A. Y. 2009-10 dated 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 involved in the above mentioned case was that as to whether the assessee is entitled for deduction U/S 80-IC or not as a whole; and also as to whether the 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 above, it is submitted that in the assessment order for A Y 2009-10, disallowance of deduction u/s 8O-IC on three units of the assessee were made considering 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. Hence, the facts were not identical as such.
5.1 It was further stated that recently, the Hon'ble High 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. and 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 State of Uttarakhand and in view of the aforesaid decision of the Hon’ble High Court, the case of the assessee does not fall within the ambit of the principles of law laid down by the Hon'ble High Court and also does not fulfill the conditions for the admissibility of deduction U/S 80-IC. Therefore, he requested that the issue in dispute may be set aside to the file of the AO, because the Hon’ble 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 Hon’ble Uttrakhand High Court in the case of CIT, Dehradun vs. Anchal Hotels Pvt. Ltd. reported in 287 CTR 233 whereby the matter was remanded back by the Hon’ble 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 Hon’ble High Court of Uttrakhand.
5.2 We have heard both the parties and perused the relevant records, especially the orders of the revenue authorities and the order of the Hon’ble High Court of Uttrakhand in the case of CIT vs. Anchal Hotels Pvt. Ltd. (Supra). We find that the Hon’ble High Court of Uttrakhand 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, without any regard to the exact location, and the manner in which it operates, its impact on the nature (environment), its relationship with the local people (local community), what 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".
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 of Ispat's case are relied on by Shri Pulak Raj Mullick. We have already extracted the relevant passage. Even applying the Mimansa Principles, we are at a total loss as to how any assistance would be derived from the principles 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 the question which is the principle. In fact, the acceptance of the assessee's argument would render it necessary for us to delete the word "Eco".
We would think that neither the blue pencil theory 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 evolved to separate that which is illegal from that which would pass 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 this case is totally without foundation when the Legislature has 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 deduction to a hotel, which is merely engaged in tourism and not Ecotourism. In other words, we are of the view that in the 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 the 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 Ecotourism. 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 Objection from the Pollution Control Board cannot be determinative of a question, whether the hotel fulfils the requirement 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 Pollution 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.
Therefore, necessarily the order passed by the Tribunal cannot be sustained. The receipt of the subsidy cannot be a hurdle in our taking the view, which we are taking as we are called upon to decide the actual scope of the provision
in this appeal. While we do not discount the fact that subsidy may have been given the actual interpretation of the provision is a task, which we cannot abdicate.
Even regarding the sites of the activities, we would think that it must have something to do with areas close to nature. No doubt, in the State of Uttarakhand, the area of natural beauty and areas close to nature, often overlapped 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 to the Tribunal but to the Assessing Officer. Learned counsel for the revenue Mr. H.M. Bhatia does not object to this 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 the Assessees and pass fresh orders taking note of the observations, which we have made.
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 conditions under Section 80-IC will not be fulfilled.
In view of the above, the appeals stand disposed of.”
5.3 After carefully perusing the decision of the Hon’ble High Court of Uttrakhand, we set aside the issue in dispute to the file of the AO with the directions to re-decide the issue in dispute on the anvil of Hon’ble Uttrakhand High Court decision in the case of CIT vs. Anchal Hotels Pvt. Ltd. (Supra).
In the result, the Assessee’s Appeal is allowed for statistical purposes.
Order pronounced on 24/04/2018.