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Issues: Interpretation of approval for tax benefits under sections 32(1)(v) and 33(l)(b) of the Income-tax Act, 1961 based on correspondence between the assessee and the Department of Tourism; Reopening of assessment under section 147(a) of the Income-tax Act challenging the entitlement to tax benefits; Validity of subsequent letters from the Department of Tourism modifying the earlier approvals; Estoppel against the Department of Tourism rescinding the earlier benefits.
Analysis: The judgment by the High Court of Andhra Pradesh involved a dispute regarding the entitlement of a hotel, "Sun-n-Sea," to tax benefits under sections 32(1)(v) and 33(l)(b) of the Income-tax Act, 1961. The controversy arose due to a reassessment under section 147(a) challenging the initial approval granted to the hotel by the Department of Tourism. The Income-tax Officer contended that the hotel was not approved for the tax benefits, leading to a denial of allowances under the Income-tax Act. However, the Appellate Assistant Commissioner overturned the Income-tax Officer's decision, relying on the correspondence between the assessee and the Department of Tourism. The letters dated March 12, 1975, and March 9, 1978, clearly confirmed the approval of the hotel for tax benefits under sections 32(1)(v) and 33(l)(b)(B)(ii). The Appellate Tribunal upheld this decision, prompting the Revenue to seek the court's opinion on the matter. The court highlighted the importance of the letters issued by the Department of Tourism, emphasizing that the subsequent attempts to modify the approvals were unjustified. The court criticized the Department's actions of attempting to rescind the benefits conferred earlier, citing estoppel against such unilateral rescission. The court deemed the modified orders as invalid and upheld the initial approvals granted to the hotel, as affirmed by the Appellate Assistant Commissioner and the Appellate Tribunal. In conclusion, the court ruled in favor of the assessee, affirming their entitlement to the tax benefits under sections 32(1)(v) and 33(l)(b) of the Income-tax Act, 1961. The court rejected the Revenue's arguments and held that the benefits conferred earlier must be upheld, denouncing the attempts to modify the approvals retroactively.
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