1984 (7) TMI 164 - AT - Income Tax

Summary

Issues Involved:
1. Eligibility for relief under Section 80J of the Income-tax Act, 1961.
2. Eligibility for extra depreciation for approved hotels.
3. Requirement of specific approval from the Central Government for tax reliefs.
4. Validity of the approval dates provided by the Department of Tourism.

Issue-Wise Detailed Analysis:

1. Eligibility for relief under Section 80J of the Income-tax Act, 1961:
The assessee, a company running a hotel, claimed relief under Section 80J of the Income-tax Act, 1961. The claim was initially declined due to the absence of specific approval from the Central Government. The Commissioner (Appeals) found that there was approval for two years but not for the other two years. The Tribunal noted that the Department of Tourism had issued a letter on 4-5-1974 approving the hotel project, which was intended to cover all reliefs under the Income-tax Act. The Tribunal concluded that the approval granted on 4-5-1974 and reiterated on 13-9-1983 should be considered valid for all purposes of the Act, thereby entitling the assessee to relief under Section 80J.

2. Eligibility for extra depreciation for approved hotels:
The assessee also claimed extra depreciation admissible for approved hotels. The claim was declined by the Income-tax Officer (ITO) due to the absence of specific approval for the years under consideration. The Tribunal found that the approval granted by the Department of Tourism on 4-5-1974, which continued till 13-9-1983, was sufficient to cover the extra depreciation claim. The Tribunal emphasized that section-wise approval was not necessary and that the approval from the Department of Tourism should be considered valid for all sections of the Income-tax Act, including the claim for extra depreciation.

3. Requirement of specific approval from the Central Government for tax reliefs:
The ITO insisted on specific approval for each section of the Income-tax Act for the years under consideration. The Tribunal, however, held that such section-wise approval was not necessary. The Tribunal referred to a communication from the CBDT, which clarified that the original approval by the Department of Tourism could be taken as approval for all purposes of the Act. The Tribunal concluded that the approval granted on 4-5-1974 should be considered valid for all tax reliefs, and the communication dated 6-1-1981, which mentioned specific dates, was merely a reiteration of the original approval.

4. Validity of the approval dates provided by the Department of Tourism:
The Department of Tourism's letter dated 6-1-1981 mentioned specific dates for approval under different sections of the Income-tax Act. The Tribunal found that these dates were mentioned without understanding the implications and that the approval granted on 4-5-1974 continued to be valid. The Tribunal referred to the correspondence between the assessee and the Department of Tourism, which confirmed that the hotel project was approved from 4-5-1974 and continued to be on the approved list. The Tribunal concluded that the approval was valid for all years and for all purposes of the Act.

Conclusion:
The Tribunal held that the assessee was eligible for the reliefs under Sections 32(1)(v), 33(1)(b)(B), and 80J(6) of the Income-tax Act, 1961. The ITO was directed to quantify the relief after providing a proper opportunity to the assessee to establish its eligibility on merits. The departmental appeals were dismissed, and the assessee's appeals were allowed.