1988 (8) TMI 66 - HC - Income Tax

Summary

Issues:
Whether the approval granted by the Central Government for setting up a hotel enures for the benefit of the petitioner to avail concessions under specific sections of the Income-tax Act.

Analysis:
The petitioner sought approval in 1969 from the Department of Tourism to construct a hotel in Bombay, which was granted subject to certain conditions. The petitioner later claimed income-tax concessions for the assessment year 1973-74 but was denied as no specific permission from the Central Government was obtained. The petitioner argued that the initial approval should be deemed sufficient for income-tax reliefs or granted retrospectively when sought in 1972. The respondents contended that approval was granted in 1976 as required by the Income-tax Act. The Ministry of Tourism was not competent to grant such approval before 1970, and the petitioner did not come with clean hands regarding a letter claimed to be sent in 1972.

The court held that the approval obtained in 1969 was only for the construction of the hotel, and income-tax benefits could only be claimed once the hotel was operational. The Income-tax Act requires Central Government approval for specific sections to avail benefits, which the petitioner sought only in 1976. The court noted guidelines from the Central Board of Direct Taxes regarding approvals under the Act. The Ministry of Tourism lacked the authority to grant Income-tax Act approvals before 1970, making the 1969 approval insufficient for tax benefits. The court dismissed the petition, stating the petitioner was not entitled to benefits before October 27, 1976.

In conclusion, the court dismissed the writ petition, holding that the petitioner was not entitled to income-tax benefits before obtaining approval from the Central Government in 1976. The court emphasized the necessity of specific approvals under the Income-tax Act and the lack of authority of the Ministry of Tourism to grant such approvals before 1970. The petitioner's claim regarding the 1969 approval was deemed insufficient for tax benefits, and the court found no merit in the petition, leaving the parties to bear their own costs.