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Income Tax Appellate Tribunal, DELHI BENCH ‘A’ : NEW DELHI
Before: SHRI J.S. REDDY & SHRI A.T. VARKEY
PER A.T. VARKEY, JUDICIAL MEMBER :
This appeal, at the instance of the assessee, is filed against the order of the CIT (Appeals)-II, Dehradun dated 02.07.2012 for the assessment year 2009-10. 2. The sole issue before us is whether the AO was correct in disallowing the assessee’s claim for deduction u/s 80IC of the Income-tax Act, 1961 (hereinafter ‘the Act’) by holding that ‘eco-tourism’ is a condition precedent for claiming deduction u/s 80IC and since the assessee failed to produce muster rolls of labourers, the same was not allowed by the AO and the CIT (A) upheld the order of the AO. Now, the assessee is aggrieved by the decision of the ld. CIT (A) who has sustained the order the AO on this issue.
Brief facts are that the assessee is an individual running a hotel at Nainital under the name & style of M/s. Hotel Prim Rose. The assessee furnished return of income claiming deduction u/s 80IC of the Act in respect of the income claimed to have been derived from the said hotel. The AO examined the assessee’s claim and found it to be inadmissible on the following ground :- “
The assessee reply was examined in the light of Statutory provisions, Inspector’s report, Eco-tourism and the Circular of CCIT-Dehradun dated 30th November, 2011 and since in the AY 2006-07 the deduction claimed by the Assessee, u/s 80IC of the I T Act 11961 was rejected on the ground that the assessee was not engaged in the Eco-tourism activity as mentioned in the Fourteenth Schedule in Part C for the State of Himachal Pradesh and the State of Uttaranchal mentioned as under :- Eco Tourism including hotels, resorts, spa, entertainment parks and ropeways.”
4. Aggrieved by the said order of the AO, the assessee preferred an appeal before the first appellate authority and the ld. CIT (A) in its order dated 02.07.2012 in last para at page 12 confirmed the rejection of deduction the ground that, “In view of the above, especially the absence of NOC from pollution control board the action of ld. AO is upheld, albeit for reasons mentioned in the body of this Appellate order.”
The assessee, being aggrieved by the said decision of the ld. CIT (A), is in appeal before us.
6. Ld. AR for the assessee submitted that the AO was patently incorrect while not appreciating the fact that it was the first year i.e. AY 2009-10 of claiming the deduction u/s 80IC of the Act and holding that in AY 2006-07 the deduction claimed by the assessee u/s 80IC was rejected. He further submitted that the assessee function within the Municipal limits of Nainital and adheres to its rules and regulations regarding disposal of wastage etc.
According to the ld. AR, similar hotels in the State of Uttarakhand and Himachal Pradesh have been given 80IC deduction and for no reason, the CIT (A) has upheld the order of AO, simply by stating that in the absence of ‘NOC’ from the Pollution Control Board, the assessee is ineligible for 80IC claim, which according to ld. AR, is not correct in law. Further, the ld. AR contended that the finding of the lower authorities that “eco-tourism” is a condition-precedent and ‘NOC’ from Pollution Control Board is necessary for claiming deduction u/s 80IC of the Act is something which, the law does not stipulate and, therefore, on the reason that “NOC” from Pollution Control Board has not been produced before him, cannot be a ground for denying the 80IC deduction. According to the ld. AR, this issue is no longer res integra and in a plethora of decisions, this Tribunal has held that hotels situated at Uttarakhand qualifies for 80IC deduction and, therefore, the ld. CIT (A) was not right in upholding the action of the AO. In this regard, the following written submissions of the assessee on the decisions are reproduced below :- (i) That, while dealing with the issue of allowability of deduction u/s 80IC of the IT Act, 1961 for Hotels in the State of Uttarakhand, the Hon’ble jurisdictional ITAT, New Delhi vide its order dated 04.11.2010 in AY 2006- 07 in the case of Shri Bidhi Chand Singhal vs. ITO has allowed the claim of deduction u/s 80IC of the IT Act, 1961 as application to the Hotel unit in the State of Uttarakhand; (ii) That, the aforesaid view was further confirmed by the Hon’ble jurisdictional ITAT, New Delhi in & 1801
(Del)/2010 Assessment years 2005-06 & 2006-07 (Del)/2011 Assessment Year 2007-08 in the case of M/s. Anchal Hotels Pvt. Ltd. Vs. ACIT, Dehradun;
(iii) That later on, for claiming the deduction u/s 80IC of the Act, the issue of obtaining the NOC from Pollution Control Board was also addressed and settled by the Hon’ble ITAT, New Delhi in AY 2009-10, ITO Ward 3, Rishikesh vs. Tapovan Resorts, the Hon’ble jurisdictional ITAT dismissed the revenue appeal. In the said appeal, one of the grounds taken by the Revenue was that the NOC from Pollution Control Board was prerequisite for claiming the deduction u/s 80IC of the Act.
(iv) That the ld. CIT (Appeal) vide Order dated 09.04.2015 for the AY 2012-13, on the same facts and ground, relying upon the judgment of the Hon’ble jurisdictional ITAT, New Delhi in the case of ITO, Ward 2, Rishikesh-Uttarakhand vs. Tapovan Resorts, Tehri Garwal-Uttarakhand – AY 2009-10 DATED 20.10.2014 has allowed the assessee’s appeal. Ld. AR also submitted that in assessee’s own case for AY 2012-13, the ld.
CIT (A) has allowed the 80IC deduction. So he prays that the orders of the lower authorities be set aside and the appeal of assessee be allowed.
Ld. DR, relying on the decision of the AO and CIT (A), contended that the 80IC deduction is meant for promotion of eco-tourism and, therefore, the hotels in the State of Uttarakhand in order to claim deduction u/s 80IC of the Act should have had environmental clearance and Pollution Control Board ‘NOC’ in its possession before claiming deduction u/s 80IC of the Act and the ld. CIT (A) was right in sustaining the action of the AO and also by taking into consideration the fact that “eco-tourism” is a condition precedent for being eligible to qualify for 80IC deduction. The assessee was directed to bring on record the ‘NOC’ of the Pollution Control Board, which the assessee failed to do. So the ld. CIT (A) had no other alternative but to deny deduction u/s 80IC of the Act for the said assessee hotel. So, according to the ld. DR, since the lower authorities were right in denying the deduction u/s 80IC of the Act, the orders of the authorities below be not interfered with.
We have heard both the parties and perused the material on record. We take note of the fact that assessee has hotel at Nainital in the State of Uttarakhand, namely, Hotel Prim Rose. We find that the assessee has claimed deduction u/s 80IC in respect of Hotel Prim Rose for the first time in AY 2009-10 and the AO has wrongly stated that in the AY 2006-07, the deduction claimed by the assessee u/s 80IC deduction was rejected. We further find that for AY 2012-13 in the case of the assessee, the CIT (A), Haldwani by order dated 24.08.2015 has allowed the deduction u/s 80IC with the observation that, “The averments of the ld. AR and the case of ITO, Ward 2, Rishikesh v. Tapovan Resorts (ITA No.765/Del/2013) has been considered. Now that the Hon’ble ITAT was given a finding that even a Pollution Certificate may not be required to claim deduction u/s 80IC of the Act, the Appellant deserves to succeed as far as ground no.1 is concerned.” We find force in the arguments of the ld. AR that the rule of consistency needs to be observed and followed. Be that as it may be, let us examine whether the AO’s action is as per law when he disallowed the claim u/s 80IC of the Act. 8.1 In respect to the claim of the assessee’s hotel that it is eligible for 80IC deduction, we find force in the contention of the ld. AR that this issue is no longer res integra. The contention of the AO that NOC from the Pollution Control Board is a requirement for satisfying ‘eco-tourism’ which is a condition precedent for being eligible for 80IC deduction has been considered by the Coordinate Bench of this Tribunal in Shri Bidhi Chand Singhal vs. ITO, Rudrapur in for assessment year 2006-07 dated 04.11.2010 and the Tribunal has held as under :- “5. We have heard both the parties, gone through the assessment order and order of CIT(A) and relevant provisions which have been referred by the AO and CIT(A). The provisions as contained in Section 80IC and as relevant to the case of the assessee are as under:-
“80-IC. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (2), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains, as specified in sub-section (3). (2) This section applies to any undertaking or enterprise,- (a) ............
(b) which has begun or begins to manufacture or produce any article or thing, specified in the Fourteenth Schedule or commences any operation specified in that Schedule, or which manufactures or produces any article or thing, specified in the Fourteenth Schedule or commences any operation specified in that Schedule and undertakes substantial expansion during the period beginning- (i) ..................
(ii) on the 7th day of January, 2003 and ending before the 1st day of April, 2012, in the State of Himachal Pradesh or the State of Uttaranchal; or (iii) ..................” Item No.15 of Part C of the Fourteenth Schedule reads as under:- “15. Eco-tourism including hotels, resorts, spa, entertainment/amusement parks and ropeways.”
From the above Section and Item No.15 of Part C of the Fourteenth Schedule, it can be observed that what is eligible for deduction is eco-tourism which include inter alia hotels. It has been the contention of the assessee that his hotel is approved by the Government. The hotel cannot be approved by the Government without obtaining No Objection from the Pollution Department. There is no material on record to show that Pollution Department of the Government has not given No Objection to the assessee. If it is so, then, it cannot be said that the assessee is running a hotel which is outside the norms prescribed by the Pollution Department. If a plain reading is given to Item No.15 reproduced above, then, eco-tourism inter alia include hotels. No material has been brought on record to show that “eco-tourism” status has been granted to any other hotel and which status assessee does not have. If the logic applied by the Assessing Officer and CIT (A) is made applicable, then, the hotels which are not having the alleged “eco-tourism” status cannot be held to be entitled to deduction u/s 80-IC. If none of the hotels can be granted deduction u/s 80- IC, then, the Item No.15 of Part C of the Fourteenth Schedule will be redundant. Therefore, in our opinion, in the absence of definition of “eco-tourism” the hotel as added into the Item No.15 of Part C is to be construed to be hotel situated in the State of Himachal Pradesh or the State of Uttaranchal having a valid licence on the basis of No Objection from Pollution Department which can be treated to be a hotel eligible for deduction u/s 80IC as per provisions of Section 80IC. Therefore, we allow the claim of deduction u/s 80-IC to the assessee and the appeal of the assessee is allowed.”
We also find that the other decisions relied upon by the ld. AR further fortify the case of the assessee. Therefore, in our opinion, the assessee falls in the ken of eco-tourism which qualifies for deduction u/s 80IC of the Act and, therefore, we set aside the orders of the authorities below and allow the grounds taken by the assessee. Accordingly, the appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed. Order pronounced in open court on this 27th day of January, 2016.