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Income Tax Appellate Tribunal, DIVISION BENCH, CHANDIGARH
Before: SHRI SANJAY GARG & DR. B.R.R. KUMAR
Per Sanjay Garg, Judicial Member:
The captioned are cross appeals. The appeal preferred by the
assessee for assessment year 2009-10 is against the Revision order
dated 12.03.2014 of the Commissioner of Income Tax [hereinafter
referred to as ‘CIT’] passed u/s 263 of the Income-tax Act, 1961 (in
ITA Nos.481/Chd/2014 & 417 /Chd/2017/ - Hotel Landmark, Shimla 2 short 'the Act') whereas the Revenue has preferred the captioned
appeal against the consolidated order dated 27.12.2016 of
Commissioner of Income Tax (Appeals), Shimla [hereinafter referred
to as ‘CIT(A)’].
Since identical facts are involved in both the appeals, hence,
these were heard together and are being disposed of by this common
and consolidated order. First we take up the assessee’s appeal ITA
No. 481/Chd/2014 agitating the invoking of the revisionary
Jurisdiction by the Ld. CIT u/s 263 of the I.T. Act.
The assessee is running a hotel in the State of Himachal
Pradesh and the said business is the sole business of the assessee.
The assessee claimed deduction u/s 80IC of the Act having started its
business within the stipulated dates as provided u/s 80IC of the Act
to be eligible to claim deduction and further that the hotel business
of the assessee falls under the item No.15 of Part C of Schedule
XIV. The relevant provisions for the sake of convenience are
reproduced as under:-
“Section 80IC
Special provisions in respect of certain undertakings or enterprises in certain special category States.
(1) …… (2) ……. (3) 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
ITA Nos.481/Chd/2014 & 417 /Chd/2017/ - Hotel Landmark, Shimla 3 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……
The relevant extracts of the Fourteenth Schedule of the Act are also reproduced herein as:
“…..THE FOURTEENTH SCHEDULE
[see section 80-IC(2)] list of Articles of things or operations …… Part C …… 15. Eco-tourism including
Hotels resorts, spa, entertainment / amusement parks and ropeways …….”
The dispute in this case is regarding the meaning/interpretation ‘Eco-tourism including hotels, resorts spa, of the term entertainment / amusement parks and ropeways …..”. As per the
assessee, the hotels established during stipulated period as per the
provisions of section 80IC are eligible to claim deduction u/s 80IC of
the Act under the item Eco-tourism including hotels, resorts, spa,
entertainment / amusement parks and ropeways. On the other
hand, the Ld. CIT held that every hotel established in the State of
Himachal Pradesh would not constitute as an Eco-Tourism unit. That
there were certain conditions / guidelines for terming the units
including a hotel as an Eco-Tourism unit. That a hotel established in
ITA Nos.481/Chd/2014 & 417 /Chd/2017/ - Hotel Landmark, Shimla 4 the city or at a commercial place would not fall in the definition of
Eco-tourism unit.
Before the Ld. CIT, the Ld. Counsel for the assessee relied on
the decision of this Tribunal in the case of Shri Raghunath Singh
Thakur, Hotel Martina, Shimla in ITA Nos. 152, 469 & 1144 (CHD)
of 2010 for assessment years 2006-07 to 2008-09 dated June 22,2012.
However, the Ld. CIT observed that the interpretation of Eco-
Tourism as interpreted by the Tribunal had not attained finality as
the Department was already in appeal before the Hon'ble High Court,
which was pending for adjudication. Secondly, that in somewhat
similar facts and circumstances, in the case of ‘M/s Sirmour Hotels
(P) Ltd. Vs. DCIT’, in ITA No. 604/Chd/2012 for the assessment
year 2007-08 (ITAT, Chandigarh Bench ‘A’), the assessee challenged
the order passed u/s 263 of the Income Tax Act. That the facts of the
said case were squarely applicable to the present case. In that case
also, the Assessing officer had made no enquiry to examine whether
the assessee’s business was entitled for deduction u/s 80-IC or not.
In the said case, the Tribunal vide its order dated 24.9.2012, held the
assessment order passed in the case was erroneous and prejudicial to
the interest of Revenue and confirmed the findings of the CIT.
Before us, the contention of the Ld. Counsel for the assessee
has been that the Assessing officer had duly applied his mind while
passing the assessment order. That the view taken by the Assessing
officer was one of the possible views as per law and, hence, it cannot
be said that the order passed by the Assessing officer was erroneous.
ITA Nos.481/Chd/2014 & 417 /Chd/2017/ - Hotel Landmark, Shimla 5 The Ld. Counsel has further contended that for invoking the
jurisdiction u/s 263 of the Act, the order of the Assessing Officer
must be erroneous as well prejudicial to the interest of Revenue. The
Ld. Counsel for the assessee has also placed reliance upon the
decision dated 28.9.2015 in the own case of the assessee for
assessment year 2010-11 wherein the Tribunal while relying on the
decision in the case of Raghunath Singh Thakur (supra) has upheld
the order of the Ld. CIT(A) directing the Assessing officer to give
the benefit to the assessee u/s 80IC of the Act which was denied by
the Assessing officer during the assessment proceedings. The Ld.
Counsel has further relied upon the decision of the ‘SMC Bench’ of
the Tribunal in the case of Asia Health Resorts dated 23.3.2017
passed in ITA Nos. 1297/Chd/2016 and 1221/Chd/2016. The Ld.
counsel has further relied upon the decision of the Hon'ble
Jurisdictional High Court in the case of ‘CIT Vs. Max India Ltd’
[2004] 268 ITR 128 (P&H) wherein the Hon'ble High Court has held
that if the view taken by the Assessing officer was a possible view,
Commissioner had no jurisdiction to exercise powers u/s 263 and to
treat the order as erroneous in any manner. The Ld. counsel has
further submitted that the Revenue has challenged the aforesaid
decision before the Hon'ble Supreme Court, however, the Hon'ble
Supreme Court vide its order November 1, 2007 reported in ‘CIT Vs.
Max India Ltd.’ [(2008] 168 Taxman 188 (SC) has upheld the
findings of the Hon'ble High Court. The Hon'ble Supreme Court
further held that even the subsequent amendment in the statue, even
though retrospective, will not attract the provision of section 263 of
ITA Nos.481/Chd/2014 & 417 /Chd/2017/ - Hotel Landmark, Shimla 6 the Act, particularly, when the position of law as it stood on the date
when the Commissioner passed the order u/s 263 had been taken into
account. The Ld. counsel has also placed reliance on the decision of
the Hon'ble Supreme Court in the case of ‘Malabar Industrial Co. Ltd
v CIT’ in [2000] 109 Taxman 66 (SC) in this respect to state that in
order to invoke section 263, the Assessing officer’s order must be
erroneous as well as prejudicial to the interest of Revenue and that if
one of the condition is absent, the Commissioner cannot exercise
jurisdiction u/s 263 of the Act
The Ld. DR, on the other hand, has relied on the decision of the
Hon'ble High Court of Uttarakhand in the case of ‘CIT Vs. Anchal
Hotel (P) Ltd.’ reported in [2016] 70 taxman.com 330. The relevant
provisions of section 80IC since are also applicable in case of units
established in the state of Uttarakhand, the Hon'ble Uttarakhand
High Court on an identical controversy has held that only hotel which
are set up as Eco-Tourism unit would be entitled for deduction u/s
80IC of the Act. The Hon'ble High Court while holding so, has
considered the guidelines for Eco-Tourism in an around protected
areas by Ministry of Environment, Forest Government of India. The
Ld. DR, therefore, has submitted that in the absence of any decision
of any other higher Court, the decision of the Hon'ble Uttarakhand
High Court has settled the law and in the light of the aforesaid
decision, the assessment order passed by the Assessing officer can be
well said to be erroneous and prejudicial to the interest of Revenue.
ITA Nos.481/Chd/2014 & 417 /Chd/2017/ - Hotel Landmark, Shimla 7 8. We have considered the rival contentions and have also gone
through the records. We find that in this case, not only at the time of
the assessment order but also at the time of passing of the impugned
order dated 12.3.2014 u/s 263, the view taken by the Assessing
officer was one of the possible view which was fortified by the
decision of the Tribunal in the case of ‘Raghunath Singh Thakur
(supra). The said decision of the Tribunal was also available and had
been discussed by the Ld. CIT in his impugned order passed u/s 263
of the Act, hence, under the circumstances, the Assessing officer had
taken one of the possible view and, therefore, in the light of the
decision of the Hon'ble Supreme Court in the case of ‘Malabar
Industrial Co. Ltd v CIT’ (supra) and in the case of CIT Vs. Max
India Ltd.’ (supra) there was no justification on the part of the Ld.
CIT to invoke the jurisdiction u/s 263 of the Act.
So far as the arguments of the Ld. DR that the issue is
squarely covered by the decision of the Hon'ble Uttarakhand High
Court in the case of ‘CIT Vs. Anchal Hotel (P) Ltd’., with all the due
respect, it is to be noted that the Hon'ble Uttarakhad High Court is
not the jurisdictional High Court of this Tribunal. Hence, the said
decision of the Hon'ble Uttarakhand High Court does not hold a
binding precedent. Hence, the proposition that the interpretation of a
provision by the subsequent decision of a Supreme Court or
Jurisdictional High Court acts retrospectively and that the view
expressed in the later decision would have to be regarded having
always been a law as on the date of its incorporation, cannot be
applied in this case to hold that the order of the Assessing officer is
ITA Nos.481/Chd/2014 & 417 /Chd/2017/ - Hotel Landmark, Shimla 8 erroneous. The benefit of the subsequent decision of the Hon'ble
Uttrakhand High Court in the case of CIT Vs. Anchal Hotel (P) Ltd.’
(supra) was not available with the Assessing officer at the time of
assessment proceedings. In view of this, the order of the Assessing
officer cannot be held to be erroneous on this account also. Reliance
in this respect can be placed on the decision of the Jurisdictional
Punjab & Haryana High Court in the case of ‘Commissioner of
Income Tax Vs. Vardhman Spinning’ (1997) 93 Taxman 453 (P&H).
The view adopted by the Assessing Officer, thus, was one of the
possible views. In view of this, it cannot be said that the order of the
Assessing officer was erroneous in so far as it was prejudicial to the
interest of Revenue and, therefore, there is no justification on the
part of the Commissioner of Income Tax to invoke the jurisdiction
u/s 263 of the Act. Therefore, the impugned order u/s 263 of the Act
is set aside and consequent additions in compliance of the said order
are ordered to be deleted.
9 The appeal filed by the Revenue is in relation to the action of
the CIT(A) in deleting the additions made by the Assessing Officer in
the assessment framed u/s 143(3) read with section 263 of the Act in
compliance of the directions issued by the CIT in his order passed u/s
263 of the Act. Since, we have set aside the order of the Ld. CIT
passed u/s 263 of the Act, hence the consequential assessment made
by the AO becomes infructuous and the additions if any, made there
in stand deleted.
ITA Nos.481/Chd/2014 & 417 /Chd/2017/ - Hotel Landmark, Shimla 9 In the result, the appeal of the assessee (ITA No.
481/Chd/2014) is allowed whereas the appeal of the Revenue (ITA Nos. 417 /Chd/2017) is hereby dismissed. Order pronounced in the Open Court on 11/06/2018 Sd/- Sd/-
(B.R.R.KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 11.06.2018 Rkk
Copy to: • The Appellant • The Respondent • The CIT • The CIT(A) • The DR