By TIOL News Service

NEW DELHI, NOV 24, 2016: THE ISSUE IS - Whether NOC from the Pollution Control Board is a sin qua non for satisfying the definition of 'ecotourism', which is a condition precedent for eligibility of Section 80IC deduction. NO IS THE VERDICT.

Facts of the case:

The assessee had three hotels in the State of Uttarakhand, namely, Hotel 'PD', Hotel 'D' and Hotel 'P'. The assessee had claimed deduction u/s 80IC on Hotel 'PD' since A/Y 2005-06, on Hotel 'D' since A/Y 2006-07 and where as the Hotel 'P' since A/Y 2008-09. In past cases were completed under scrutiny and deduction u/s 80IC was claimed and accepted by the revenue on all the three hotels. But in A/Y 2009-10, on the instruction of higher authorities the deduction was denied by the AO. The AO had rejected the claim of deduction for the restaurant 'D' and also rejected the claim for deduction u/s 80IC in respect of Hotel 'P' and Hotel 'PD'. The CIT had held that assesee is not eligible to claim deduction u/s 80IC on account of the fact that it does not fall under the NIC classification 545101, to which the exemption was provided.

On appeal , the ITAT held:

++ it is found that the assessee has claimed deduction u/s 80IC in respect of Hotel 'PD' from 2005-06, Hotel 'D' from 2006-07 and Hotel 'P' from 2008-09 and the 80IC deduction was granted by the A.O from A/Y 2005-06 which was completed u/s 143(3) assessment and in the subsequent A/Y 2009-10 also, the A.O has allowed deduction under scrutiny assessment. The Co-ordinate Bench on identical facts and circumstances needs to be followed. Respectfully following the judicial precedent, the impugned order is set aside. What is eligible for deduction is ecotourism which include inter alia hotels. The assessee claimed 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;

++ the ecotourism 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 AO 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, it is opinioned that in the absence of definition of "ecotourism" 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, the claim of deduction u/s 80-IC is allowed to the assessee and the appeal of the assessee is allowed. It is opinioned that the assessee falls in the ken of eco-tourism which qualifies for deduction u/s 80IC and, therefore, Tribunal does not found any infirmity in the order of CIT (A) which warrants any interference on our part.

(See 2016-TIOL-2039-ITAT-DEL)