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Income Tax Appellate Tribunal, DELHI BENCH ‘B’ : NEW DELHI
Before: SHRI A.T. VARKEY & SHRI PRASHANT MAHARISHI
O R D E R PER A.T. VARKEY, JUDICIAL MEMBER :
This appeal, at the instance of the revenue, is filed against the order of the CIT (Appeals)-I, Dehradun dated 31.12.2012 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 NOC from Pollution Control Board, the same was not allowed by the AO. Now, the revenue is aggrieved by the decision of the ld. CIT (A) who has allowed the claim of the assessee u/s 80IC of the Act.
Brief facts are that the assessee runs three hotels at Roorkee in Uttarakhand. It 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 hotels. The AO examined the assessee’s claim and found it to be inadmissible because, according to the AO, the eco-tourism is a condition precedent to be complied with by the assessee hotels for claiming deduction u/s 80IC of the Act and since the assessee failed to produce the ‘NOC’ from the Pollution Control Board which, according to him, is mandatory and pre- requisite condition for qualifying the hotel as eco-tourism in order to be eligible for deduction u/s 80IC of the Act, the AO disallowed the claim of the assessee hotel.
Aggrieved by the said order of the AO, the assessee preferred an appeal before the first appellate authority, in which the assessee cited similar cases of hotels like assessee which had also claimed 80IC deduction, which had been allowed by the Tribunal; and on the strength of these orders of the Tribunal’s decision in respect of similar hotels, similarly situated in the State of Uttarakhand and Himachal Pradesh, claimed before the ld. CIT (A) that the claim made by the assessee hotel before the AO qualifies for 80IC deduction.
The ld. CIT (A), after elaborately discussing the legislative intent and after going through the legislative history and case laws on the subject, held as follows :- “1.24 It has been submitted by the assessee that there is nothing in the IT Act which would suggest that having the NOC is a necessary condition for the said deduction. It has also been submitted in many cases that the assessees concerned applied for the NOC, often with a retrospective period (covering the previous year in question) and also got the same. It is, however, noticed that the NOCs have been given specifically since the date of the application even though NOC for the past period has not been denied explicitly nor have the fees paid for the past been refunded by the Pollution Control Board. According to these assesses, in this situation, the NOC should be deemed to have been given for the past also. But, that question would need to be answered only if it were held that the existence of the NOC for the previous year needs to be established as a fact. As. discussed above, the ratio of the decisions of the Hon. ITAT (supra) is that the NOC should not have been denied. It is negation of negative; not assertion of positive.
1.25 According to my understanding of the ratio of the decisions (supra), deduction should be allowed if the assessee satisfied the following conditions: I. It is a hotel II. It has a valid license III. NOC from the Pollution Control Board has not been denied to it. Since, the assessee in question fulfils all these conditions, it is held, following the ratio of the decisions of the Hon. ITAT in the cases of Bidhi Chand Singhal and Anchal Hotels (supra) that the assessee should be given the benefit of deduction u/s 80-IC of the I.T. Act. In this connection, it needs to be put on record that, while deciding an appeal earlier (Appeal No.27/HDR/2009-10: Mr. Sunder Lal Semwal: AY 2007-08), I had held that, if the assessee did not have the NOC, the deduction should not be allowed to it. But, on a deeper appreciation of the facts and circumstances as well as the provision of law, I am of the view that, if the ratio of the decisions of the Hon. ITAT is applied properly, deduction should not be denied simply because the assessee is unable to show that it has the NOC from the Pollution Control Board. The AO is directed to allow the deduction.” 5. The revenue, being aggrieved by the said decision of the ld. CIT (A), is in appeal before us.
6. Ld. DR, relying on the decision of the AO, contended that for promotion of eco-tourism, the hotel in the State of Uttarakhand in order to claim deduction u/s 80IC of the Act should have had environmental and Pollution Control Board ‘NOC’ in its possession before claiming deduction u/s 80IC of the Act; and the ld. CIT (A) erred in not 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. AO 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 ld. CIT (A) has erred in not taking into consideration this important legal requirement before giving disallowance u/s 80IC of the Act, the ld. DR prays that the order of the ld. CIT (A) be reversed and the AO’s order be restored.
On the other hand, the ld. AR submitted that he has three hotels, namely, Hotel Prem Dynasty, Hotel Dynasty and Hotel Prem Aaansh. He pointed out that the assessee has claimed 80IC deduction in respect of Hotel Prem Dynasty from 2005-06, Hotel Dynasty from 2006-07 and Hotel Prem Aaansh from 2008-09. Ld. AR also pointed out that 80IC deduction was allowed for the claims made in respect of these hotels by scrutiny assessment u/s 143(3) of the Act, wherein the claim of the 80IC deduction was allowed for three hotels. Only, in this assessment year 2009-10, the AO has not allowed 80IC claim of the assessee. According to the ld. AR, as per the rule of consistency, the AO should not have disallowed the claim of the assessee. 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 AO has denied this deduction to it, simply by asking for the ‘NOC’ from the Pollution Control Board which, according to ld. AR, is not a requirement as per law. Further, the ld. AR contended that the finding of the AO that eco- tourism is a condition-precedent and ‘NOC’ from Pollution Control Board 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 Hardwar, Uttarakhand qualifies for 80IC deduction and, therefore, the ld. CIT (A) has rightly granted the same to the assessee. So he prays that the impugned order may not be disturbed.
We have heard both the parties and perused the material on record. We take note of the fact that assessee has three hotels in the State of Uttarakhand, namely, Hotel Prem Dynasty, Hotel Dynasty and Hotel Prem Aaansh. We find that the assessee has claimed deduction u/s 80IC in respect of Hotel Prem Dynasty from 2005-06, Hotel Dynasty from 2006-07 and Hotel Prem Aaansh from 2008-09 and the 80IC deduction was granted by the AO from AY 2005- 06 which was completed u/s 143(3) assessment and in the subsequent AY 2009-10 also, the AO has allowed deduction under scrutiny assessment. We find force in the arguments of the ld. AR that as per the rule of consistency, since the facts permeating in the earlier years have not changed, the AO ought not to have changed the consistent stand of the revenue. 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 hotels 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.”
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 do not find any infirmity in the order of ld. CIT (A) which warrants any interference on our part. Accordingly, we do not find any merit in the appeal of the revenue and the appeal stands dismissed.
In the result, the appeal of the revenue is dismissed. Order pronounced in open court on this 11th day of November, 2015.