2014 (11) TMI 762 - AT - Income Tax

Rejection of deduction u/s 80IC(2) Failure to obtain NOC from the pollution Control Board - Whether the AO can disallow the claim for deduction u/s 80IC for the asstt. Year 2009-10 and 2010-11 when the claim has not been disallowed or withdrawn in the first two years Held that - The assesese had claimed deduction u/s 80IC for the first time during the year AY 2007-08 - The return was processed u/s 143(1) and the deduction has not been disallowed or withdrawn till date the assesee has been claiming deduction u/s 80IC of the Act for the earlier years and that the AO has allowed the same in the first year u/s 143(3) and as it is well settled that if the conditions for allowability of a deduction is examined by the AO in the initial year of claim then, in the subsequent year, this aspect cannot be reviewed by the AO and a contrary view taken - The particulars of the assessments where the claim has been made and allowed in the earlier years - The assessments of the earlier years or the later years are not disturbed and the assessee was allowed the claims u/s 80IC. In Commissioner of Income Tax and others Versus M/s Delhi Press Patra Prakashan Ltd. And others 2013 (6) TMI 70 - DELHI HIGH COURT it has been held that the requisite conditions to be fulfilled for allowability of deduction u/s 80 I ought to be satisfied, not only in the first or the initial year, but in all the assessment years in which the deduction u/s 80I is claimed by the assessee - The AO has examined the condition of allowability of the claim u/s 80IC in the initial assessment year of the claims i.e. A.Y. 2005-06 itself in an order passed u/s 143(3) of the Act - This was followed in the subsequent A.Y. These assessments are not disturbed till date - There is no change in the facts and circumstances of the case - Only a fresh view, contrary to the earlier view is taken during the AY on the same set of facts and exemption is denied Decided against revenue.

Summary

Issues:
1. Allowance of deduction u/s 80IC(2) based on certain conditions.
2. Requirement of ecotourism for claiming deduction u/s 80-IC.
3. Disallowance of deduction based on factual findings.

Issue 1: Allowance of deduction u/s 80IC(2) based on certain conditions:
The case involved appeals by the Revenue against the order of Ld.CIT(Appeals)-I, Dehradun regarding the Assessment Years 2009-10, 2010-11. The primary contention was whether the claim of the assessee for deduction u/s 80IC(2) should be allowed. The Revenue argued that the rejection of the deduction was not solely due to the failure to obtain NOC from the Pollution Control Board but also on other factual grounds. The Ld. CIT(A) allowed the deduction based on the conditions that the hotel had a valid license and NOC from the Pollution Control Board was not denied. The Tribunal analyzed the history of the deduction claim by the assessee in previous years and held that the AO cannot disallow the claim for the current years when it was allowed in earlier assessments, citing precedents and legal principles. The Tribunal upheld the order of the Ld. CIT(A) for different reasons, ultimately dismissing the appeal of the Revenue.

Issue 2: Requirement of ecotourism for claiming deduction u/s 80-IC:
The Revenue contended that ecotourism is a condition precedent for hotels to claim deduction u/s 80-IC of the IT Act, 1961. However, the Tribunal focused on the specific conditions that needed to be satisfied for claiming the deduction, such as being a hotel, having a valid license, and not being denied NOC from the Pollution Control Board. The Tribunal did not find ecotourism to be a mandatory requirement for claiming the deduction, and based its decision on the fulfillment of the specified conditions.

Issue 3: Disallowance of deduction based on factual findings:
The Revenue argued that the rejection of deduction u/s 80IC(2) was not solely due to the lack of NOC from the Pollution Control Board but also on other factual grounds. The Tribunal examined the facts and circumstances of the case, along with the orders of the authorities below and relevant case laws. It concluded that the AO cannot disallow the deduction in the current years when it was allowed in earlier assessments unless there are substantial changes or valid grounds for doing so. The Tribunal referred to legal precedents and principles to support its decision and dismissed the appeal of the Revenue based on these findings.

In conclusion, the Tribunal analyzed the issues raised by the Revenue regarding the allowance of deduction u/s 80IC(2) and the requirement of ecotourism for claiming the deduction. It emphasized the importance of consistent application of tax laws and legal principles across assessment years, ultimately upholding the order of the Ld. CIT(A) and dismissing the appeals of the Revenue.