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2015 (6) TMI 316 - AT - Income TaxExemption claimed u/s 80 IC denied - Held that - The assessee has been granted deduction u/s 80 IC for the AY 2005- 06, 2006-07 and 2007-08. The first year of claim was the A.Y. 2005-06. The impugned AY i.e. AY 2008-09 is the fourth year of the claim. The Assessing Officers over a period of three years being assessment years 1988-89, 1989-1990 and 1990-1991 have consistently accepted the claim of the assessee for deduction under section 80-I of the Act and it would not be open for the Assessing Officer to deny the deduction under section 80-1 of the Act on the ground of non fulfillment of the conditions under section 80- 1(2) of the Act without disturbing the assessment for the assessment years relevant to the previous year in which the Unit Nos. 2 & 3 were established. Thus where relief of a tax holiday had been granted to an assessee in an initial assessment year in which the conditions for grant of tax holiday had tobe examined, denial of relief in the subsequent years would not be permissible without disturbing the assessment in the initial assessment year. See CIT vs. Delhi Patra Prakashan Ltd. 2013 (6) TMI 70 - DELHI HIGH COURT , Saurashtra Cement 1979 (2) TMI 21 - GUJARAT High Court and Paul Brothers 1992 (10) TMI 5 - BOMBAY High Court - Decided in favour of assessee.
Issues Involved:
1. Disallowance of Rs. 8,16,195/- claimed by the assessee under Section 80IC of the Income Tax Act. 2. Inclusion of hotels under the ambit of eco-tourism for the purposes of Section 80IC. 3. Consistency of granting deductions under Section 80IC in subsequent years without disturbing the initial year's assessment. Detailed Analysis: Issue 1: Disallowance of Rs. 8,16,195/- claimed under Section 80IC The assessee, a company, filed its return for AY 2008-09 claiming a deduction of Rs. 8,16,195/- under Section 80IC. The Assessing Officer (AO) denied this exemption, citing that the hotel did not promote eco-tourism and failed to meet the necessary conditions for such a deduction. The AO listed several reasons, including the lack of investment in environmental conservation, use of non-conventional energy resources, and absence of eco-friendly practices like water recycling and rainwater harvesting. The assessee's appeal to the First Appellate Authority was unsuccessful, leading to a further appeal to the ITAT. Issue 2: Inclusion of hotels under the ambit of eco-tourism for Section 80IC The AO argued that the hotel did not qualify as an eco-tourism unit, which is a prerequisite for the deduction under Section 80IC. The AO noted that the hotel did not engage in activities promoting eco-tourism nor did it have any measures in place for energy conservation or environmental protection. The assessee contended that hotels are included under eco-tourism as per Item No. 15 of PART-C of the XIV schedule, but this was not accepted by the authorities. Issue 3: Consistency in granting deductions under Section 80IC The assessee argued that the deduction under Section 80IC had been granted in previous years (AY 2005-06, 2006-07, and 2007-08) and should not be re-examined for AY 2008-09. The ITAT referred to the case of ITO vs. M/s Ganga Beach Resorts, where it was held that if the conditions for allowability of a deduction are examined and allowed in the initial year, the AO cannot take a contrary view in subsequent years without disturbing the initial assessment. The Tribunal also cited the Delhi High Court's ruling in CIT vs. Delhi Patra Prakashan Ltd., which emphasized the finality of assessments and the principle that conditions for deductions must be satisfied in the initial year and cannot be revisited in subsequent years without reopening the initial year's assessment. Conclusion: The ITAT concluded that the AO could not deny the deduction under Section 80IC for AY 2008-09 without disturbing the assessments of the initial years where the deduction was allowed. The Tribunal directed the AO to grant the deduction under Section 80IC, consistent with the view that once a deduction is allowed in the initial year, it cannot be denied in subsequent years unless the initial year's assessment is reopened and altered. Order: The appeal of the assessee was allowed for statistical purposes, and the AO was directed to grant the deduction under Section 80IC. The order was pronounced in the Open Court on 13th May 2015.
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