Sh. Sunder Lal Semwal, Haridwar v. ACIT, Haridwar

ITA 1901/DEL/2014 | 2007-2008
Pronouncement Date: 28-10-2016 | Result: Allowed

Appeal Details

RSA Number 190120114 RSA 2014
Bench Delhi
Appeal Number ITA 1901/DEL/2014
Duration Of Justice 2 year(s) 6 month(s) 27 day(s)
Appellant Sh. Sunder Lal Semwal, Haridwar
Respondent ACIT, Haridwar
Appeal Type Income Tax Appeal
Pronouncement Date 28-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 28-10-2016
Date Of Final Hearing 16-08-2016
Next Hearing Date 16-08-2016
Assessment Year 2007-2008
Appeal Filed On 01-04-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE : SHRI I.C. SUDHIR JUDICIAL MEMBER & SHRI L.P. SAHU ACCOUNTANT MEMBER ITA NO. 1901/DEL./2014 ASSTT. YEAR : 2007 - 08 SUNDER LAL SEMWAL VS. A.C.I.T. CIRCLE UPPER BAZAR JOSHIMATH HARIDWAR. DISTT. CHAMOLI (APPELLANT) (RESPONDENT) APPELLANT BY : SH. GAUTAM JAIN ADVOCATE & SH. P.K. KAMAL RESPONDENT BY : SH. B. RAMNUJANEYULA SR. DR DATE OF HEARING : 21. 10.2016 DATE OF PRONOUNCEMENT : 28.10 .2016 ORDER PER L.P. SAHU ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) - I DEHRADUN DATED 27.03.2012 FOR THE ASSESSMENT YEAR 2007 - 08 ON THE FOLLOWING GROUNDS : 1 . THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - I DEHRADUN HAS GROSSLY ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE OF CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT OF RS. 11 51 621 / - ON MISCONSTRUCTION OF THE STATUTORY PROVIS IONS CONTAINED IN THE ACT AND. FACTS AND CIRCUMSTANCES OF THE APPELLANT COMPANY. ITA NO. 1901/DEL./2014 2 2 THAT LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DISREGARDING THE DECISION OF HON'BLE DELHI BENCH OF TRIBUNAL IN THE CASE OF SHRI BIDHI CHAND SINGHAL HOTEL TOURIST EMPIRE VS. ITO IN ITA NO. 3419/D/2009 FOR ASSESSMENT YEAR 2006 - 07 WHEREIN IDENTICAL CLAIM OF DEDUCTION HAD BEEN ALLOWED. THE DISALLOWANCE THUS SUSTAINED IN DISREGARD OF BINDING ORDERS IS NEITHER JUSTIFIED NOR VALID. 3 THAT THE LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT ONCE THE SERIAL NO. 15 PART C OF XIV SCHEDULE CLEARLY PROVIDED THAT ECO - TOURISM INCLUDED HOTELS THEN IT OUGHT TO HAVE HELD THAT ALL HOTELS ARE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IC OF THE ACT IN VIEW OF THE JUDGEMENT OF APEX COURT IN THE CASE OF CIT VS. TAJ MAHAL REPORTED IN 82 ITR 544. 4 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THE DETAILED SUBMISSIONS AND EVIDENCE FURNISHED BY THE APPE LLANT TO SUPPORT THE CLAIM OF DEDUCTION AND AS SUCH DISALLOWANCE SO SUSTAINED IS OTHERWISE NOT IN ACCORDANCE WITH LAW. THE DISALLOWANCE MADE IS OTHERWISE BASED ON HIGHLY SUBJECTIVE WHIMSICAL AND FANCIFUL CONSIDERATIONS WHICH NEITHER IN LAW AND NOR ON FAC T CAN BE VALIDLY MADE A BASIS TO DISALLOW THE LEGITIMATE CLAIM OF DEDUCTION AND THEREFORE DISALLOWANCE SO MADE IS ILLEGAL UNTENABLE AND WHOLLY UNSUSTAINABLE. 5. THAT VARIOUS ADVERSE FINDINGS RECORDED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) W HILE CONFIRMING THE DISALLOWANCE OF CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT ARE BASED ON MISCONCEPTION OF THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT AND ARE FACTUALLY INCORRECT AND LEGALLY UNSUSTAINABLE. 2. FROM THE ABOVE GROUNDS OF APPEAL IT EMERGES OUT THAT THE ONLY ISSUE INVOLVED IN THE INSTANT APPEAL PERTAINS TO DISALLOWANCE OF CLAIM OF DEDUCTION OF RS.11 51 621/ - U/S. 80IC OF THE IT ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT ). ITA NO. 1901/DEL./2014 3 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DERIVES INCOME FROM SUPPLY OF MOH TO ITBP TRANSPORTATION WORK AND HOTEL BUSINESS. THE ASSESSEE FILED ITS RETURN OF INCOME ON 31.10.2007 DECLARING INCOME OF RS.5 83 098/ - . THE AO NOTICED THAT THE ASSESSEE CLAIMED DEDUCTION ON THE INCOME OF HOT EL BUSINESS UNDER SECTION 80IC(2)(B) OF THE ACT AS APPLICABLE TO THE STATE OF UTTARAKHAND UNDER THE ENTRY AT SL. NO. 13 OF SCHEDULE - XIV(PART C) WHICH READS AS UNDER : ECO - TOURISM INCLUDING HOTELS RESORTS SPA ENTERTAINMENT/AMUSEMENT PARKS AND ROPEWAYS . 4. THE ASSESSING OFFICER REFERRING TO OFFICE MEMORANDUM FOR INSERTION OF THE FOURTEENTH SCHEDULE TO THE IT ACT BY FINANCE ACT 2003 NOTED THAT IT LAYS DOWN THAT INDUSTRIES ELIGIBLE FOR SUCH INCENTIVES SHOULD BE ENVIRONMENT FRIENDLY WITH POTENTIAL FOR L OCAL EMPLOYMENT GENERATION AND USE OF LOCAL RESOURCES. HE ALSO NOTED THAT ONCE SEPARATE DEDUCTION FOR HOTEL BUSINESS WAS GIVEN U/ S . 80ID OF THE ACT THE PROVISIONS OF SECTION 80IC WAS INTENDED NOT FOR HOTEL OR EVEN FOR TOURISM IN GENERAL BUT EXCLUSIVELY FO R ECOTOURI S M . REFERRING TO DEFINITIONS OF ECOTOURISM IN VARIOUS DICTIONARIES THE AO FURTHER OBSERVED THAT INDUSTRIES ELIGIBLE FOR SUCH INCENTIVES SHOULD BE ENVIRONMENT FRIENDLY WITH POTENTIAL FOR LOCAL EMPLOYMENT GENERATION AND USE OF LOCAL RESOURCES. ON BEING ASKED TO JUSTIFY THE CLAIM THE ASSESSEE SUBMITTED THAT IN ORDER TO MEET ITA NO. 1901/DEL./2014 4 OUT THE ECOTOURISM NORMS HE HAS INSTALLED SOLAR WATER HEATER AND CFL LIGHTS FOR ENERGY CONSERVATION INSTALLED SEWAGE TREATMENT PLANT FOR ENVIRONMENT PROTECTION THE MATERI AL USED FOR CONSTRUCTION OF HOTEL HAS BEEN PROCURED LOCALLY AND FOR GENERATING THE LOCAL EMPLOYMENT HE HAS APPOINTED LOCAL EMPLOYEES WHICH FACTORS GO TO COMPLY WITH THE NORMS OF ECOTOURISM. IT WAS ALSO SUBMITTED THAT SIMILAR DEDUCTION HAS BEEN ALLOWED BY THE AO IN THE PAST YEAR I.E. 2006 - 07 THE INITIAL YEAR OF DEDUCTION. THE AO WAS NOT SATISFIED WITH THE CONTENTIONS OF THE ASSESSEE. THE OBSERVATIONS OF THE AO ARE SUMMARIZED AS UNDER : (I). OUT OF THE TOTAL RECEIPT OF RS.35 42 170 / - BY WAY OF HOTEL ROO M RENT 51.23% HAD BEEN RECEIVED FROM A SINGLE CUSTOMER NAMELY NTPC LTD. (TAPOVAN VISHNUGARH HYDRO POWER PROJECT JOSHIMATH). THE NTPC HAD TAKEN THE HOTEL ROOMS ON RENT ON REGULAR BASIS FOR ACCOMMODATING ITS WORKFORCE. THIS PART ITSELF HAS NOTHING TO DO W ITH TOURISM LET ALONE ECOTOURISM. (II). THE ASSESSEE'S CLAIM OF HAVING SOLAR WATER TREATMENT PLANT AS WELL AS SEWAGE TREATMENT PLANT WAS FOUND TO BE WRONG. THE INCOME TAX INSPECTOR WHO VISITED THE HOTEL REPORTED THAT SUCH PLANTS WERE NOT IN EXISTENCE. THEY WERE ALSO NOT REPORTED IN THE ASSESSEE'S BALANCE - SHEET. (III). THE ASSESSEE HAD ALSO PAID SEWERAGE TAX OF RS.3600/ - FOR USING THE PUBLIC SEWER. ITA NO. 1901/DEL./2014 5 (IV). THE HOTEL WAS USING CFL ALONG WITH NORMAL TUBE LIGHTS AND OTHER REGULAR ELECTRIC APPLIANCES. THE R OOMS WERE AIR - CONDITIONED. (V). NO POLLUTION CONTROL MEASURES WERE VISIBLE EVEN IN THE KITCHEN. (VI). THERE WAS NO WATER - HARVESTING OR WATER - RECYCLING OR WASTE TREATMENT. THERE WAS NO LAWN OR PLANTATION OF ANY OTHER TYPE. IT WAS NEITHER A PART OF ANY E COTOURISM UNIT NOR DOING ANY ACTIVITY TO PROMOTE ECOTOURISM. (VII). THE ASSESSEE WAS NEITHER MAKING ANY INVESTMENT FOR CONSERVING THE ENVIRONMENT OR NATURAL RESOURCES NOR MAKING ANY CONTRIBUTION IN ANY SUCH PROJECT OR PROGRAMME. (VIII). THE AO PERSONALLY VISITED THE HOTEL AND FOUND NO MEASURE RELATING TO ECOTOURISM IN EXISTENCE THERE. (IX). IN VIEW OF THIS HE CONCLUDED THAT THE ASSESSEE WAS AN ORDINARY HOTEL SITUATED IN THE MARKET WHICH FACILITATES LODGING AND BOARDING FACILITIES LIKE ANY OTHER HOTEL AND HAD NO RELATIONSHIP WITH ECOTOURISM. (X). THE ASSESSEE'S CONTENTION THAT HIS CLAIM HAD BEEN ACCEPTED IN THE PAST ALSO STOOD DISCARDED BY AO OBSERVING THAT ACCEPTANCE OF THE ASSESSEE S CLAIM IN THE PAST DID NOT PREVENT HIM FROM EXAMIN ING ITS CORRECTNESS AND IF FOUND WRONG ON MERITS DISALLOWING IT AS EACH ASSESSMENT YEAR IS A DIFFERENT ASSESSMENT YEAR AND FACTS FOR DEDUCTION ITA NO. 1901/DEL./2014 6 UNDER THE STATUTE ARE TO BE ESTABLISHED IN EACH ASSESSMENT YEAR SEPARATELY AS PER REQUIREMENT OF LAW. ACCORDINGLY THE AO HELD THAT NONE OF THE CONDITIONS FOR ELIGIBILITY OF DEDUCTION U/S. 80IC ARE FULFILLED BY THE ASSESSEE AND THEREFORE THE CLAIM OF DEDUCTION OF RS.11 51 621/ - WAS DISALLOWED. THE ASSESSEE CHALLENGED THE ORDER OF THE AO IN APPEAL BEFORE T HE LD. CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE AND SUSTAINED THE ORDER OF THE AO. 5. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DEDUCTION CLAIMED U/S. 80IC HAD BEEN ALLOWED IN EARLIER ASSESSMENT YEAR 2006 - 0 7 VIDE ORDER U/S. 143(3) BY THE ASSESSING OFFICER AND ALSO IN SUBSEQUENT YEARS 2008 - 09 2009 - 10 AND 2010 - 11 BY THE CIT(APPEALS). THE APPEAL OF THE REVENUE FILED BEFORE THE TRIBUNAL FOR A.Y. 2009 - 10 ALSO STOOD DISMISSED ON ACCOUNT OF LOW TAX EFFECT. IT WAS ALSO SUBMITTED THAT ONCE THE DEDUCTION HAS BEEN ALLOWED IN INITIAL YEAR THERE IS NO JUSTIFICATION TO DISCARD THE SAME IN SUBSEQUENT YEAR. IT WAS SUBMITTED THAT THE LD. AUTHORITIES BELOW HAVE TO FOLLOW THE RULE OF CONSISTENCY. RELIANCE IS PLACED FOR THIS P ROPOSITION ON THE FOLLOWING DECISIONS : (I). CIT VS. EXCEL INDUSTRIES LTD.358 ITR 295 (SC) (II). CIT VS. J.K. CHARITABLE TRUST 308 ITR 161 (SC) ITA NO. 1901/DEL./2014 7 IT WAS FURTHER SUBMITTED THE LD. CIT(A) WHILE DELETING THE SIMILAR ADDITION IN APPEAL FOR A.Y. 2009 - 10 HAS R EALIZED THE MISTAKE COMMITTED BY HIM IN APPEAL FOR A.Y. UNDER CONSIDERATION OBSERVING AS UNDER : 'IN THIS CONNECTION IT NEEDS TO BE PUT ON RECORD THAT WHILE DECIDING THE ASSESSEE'S APPEAL FOR AY 2007 - 08 (APPEAL NO 27/HDR/2009 - 10) I HAD ALSO ADOPTED TH E AO'S LINE OF THINKING. 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'BLE ITAT IS APPLIED PROPERLY DEDUCTION SHOULD NOT BE DENIED SIMPLY BECAUS E THE ASSESSEE IS UNABLE TO SHOW THAT IT HAS THE NOC FROM THE POLLUTION CONTROL BOARD. IT IS ALSO PUT ON RECORD THAT AS PER MY UNDERSTANDING OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW THE ASSESSEE SHOULD NOT GET THE DEDUCTION.' IT WAS THEREFORE URGED THAT THE ORDERS OF THE AUTHORITIES BELOW SHOULD BE SET ASIDE AND THE ADDITION SO SUSTAINED IS LIABLE TO BE DELETED. 6. THE LD. DR ON THE OTHER HAND RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE R UNS A COMMERCIAL HOTEL WHICH HAS NOTHING TO DO WITH THE ECOTOURISM AS DISCUSSED BY THE LD. AUTHORITIES BELOW IN THEIR RESPECTIVE ORDERS. THEREFORE THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S. 80IC OF THE ACT. ITA NO. 1901/DEL./2014 8 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PERUSED THE ENTIRE MATERIAL AVAILABLE ON RECORD INCLUDING THE ORDERS OF THE AUTHORITIES BELOW. FROM THE SUBMISSIONS OF THE ASSESSEE IT REVEALS THAT THE ASSESSEE HAS LAID EMPHASIS ONLY ON THE RULE OF CONSISTENCY AS CAN BE SEEN FROM TH E WRITTEN SYNOPSIS FILED BY THE ASSESSEE BEFORE US . THE ASSESSEE HAS NOT TRIED TO REBUT THE OBJECTIONS OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS FAILED TO FULFILL THE NORMS OF ECOTOURISM. THE ASSESSEE HAS ALSO NOT COUNTERED THE OBSERVATIONS OF THE ASS ESSING OFFICER AS SUMMARIZED BY US IN PARA 4 (I) TO (X) OF THIS ORDER. ONE OF THE FINDINGS OF THE AO BASED ON RECORD IS THAT OUT OF THE TOTAL RECEIPT OF RS.35 42 170 / - BY WAY OF HOTEL ROOM RENT 51.23% HAD BEEN RECEIVED FROM A SINGLE CUSTOMER NAMELY NTP C LTD. (TAPOVAN VISHNUGARH HYDRO POWER PROJECT JOSHIMATH) AND THE NTPC HAD TAKEN THE HOTEL ROOMS ON RENT ON REGULAR BASIS FOR ACCOMMODATING ITS WORKFORCE WHICH ITSELF HAS NOTHING TO DO WITH TOURISM OR ECOTOURISM. WHETHER S UCH SITUATION EXISTED IN PREVIOUS OR SUBSEQUENT YEARS OR NOT IS NOT MADE CLEAR EITHER ON RECORD OR FROM ANY CORROBORATIVE EVIDENCE BEFORE US. WE THEREFORE OBSERVE THAT THE CONSISTENT VIEW CAN BE TAKEN ONLY WHERE THE FACTS AND CIRCUMSTANCES OF A PARTICULAR YEAR ARE PROVED TO BE SQUARELY IDENTICAL IN THE OTHER YEAR. OTHERWISE EACH YEAR HAS TO BE VIEWED AS SEPARATE UNIT IN VIEW OF ATTENDING FACTS AND CIRCUMSTANCES OF THAT YEAR. IN FACT EXISTENCE OF IDENTICAL FACTS AND CIRCUMSTANCES IS SINE QUA ITA NO. 1901/DEL./2014 9 NON FOR APPLYING THE RULE OF CONSISTENCY W HICH DOES NOT STAND PROVED IN THE INSTANT CASE. THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE LD. CIT(A) IN THE LIGHT OF VARIOUS DEFINITIONS OF ECOTOURISM AS WELL AS THE OBSERVATIONS MADE ON THE BASIS OF OFFICE MEMORANDUM OF FINANC E BILL 2003 NOTED AB OVE ALSO HAVE NOT BEEN COUNTERED BY THE LD. COUNSEL FOR THE ASSESSEE . THE LD. COUNSEL HAS ALSO RELIED ON THE DECISION IN THE CASE OF CIT VS. ANCHAL HOTELS (P) LTD. 287 CTR 233 (UTTARAKHAND) WHEREIN IT HAS BEEN INTER ALIA OBSERVED THAT NOC FROM POLLUTION C ONTROL BOARD CANNOT BE THE SOLE DETERMINANT OF THE QUESTION AS TO WHETHER THE HOTEL IS ENGAGED IN ECOTOURISM AND THIS QUESTION HAS BEEN DECIDED IN FAVOUR OF THE REVENUE. MOREOVER IN THIS DECISION HON BLE HIGH COURT OF UTTARAKHAND HAS LEFT ALL THE MATTE RS TO THE LOWER AUTHORITIES FOR DECISION AFRESH IN TERMS OF VARIOUS NORMS OF ECOTO URISM. IN THE INSTANT CASE ALSO COMPLETE EXAMINATION IS REQUIRED ON THE NORMS OF ECOTOURISM WHETHER EXISTING IN THE PRESENT CASE OR NOT. WE THEREFORE DEEM IT EXPEDIENT IN T HE INTEREST OF JUSTICE TO RESTORE THE ENTIRE MATTER TO THE FILE OF ASSESSING OFFICER FOR DECIDING THE ISSUE AFRESH AFTER CONSIDERING THE RULE OF CONSISTENCY IF THE IDENTICAL FACTS AND CIRCUMSTANCES ARE PROVED TO EXIST IN PREVIOUS AND SUBSEQUENT YEARS AND A LSO IN TERMS OF VARIOUS NORMS OF ECOTOURISM AS ENVISAGED IN THE DECISION OF HON BLE UTTARAKHAND HIGH COURT IN THE CASE OF ITA NO. 1901/DEL./2014 10 AANCHAL HOTELS (P) LTD. (SUPRA) RELIED ON BY THE ASSESSEE BEFORE US. NEEDLESS TO SAY THE ASSESSEE SHALL BE GIVEN REASONABLE OPPORTUNI TY OF BEING HEARD. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28.10.2016 . SD/ - SD/ - ( I.C. SUDHIR ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28.10.2016 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BE NCHES NEW DELHI