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TMI Blog2016 (6) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... Ecotourism. Therefore, necessarily the order passed by the Tribunal cannot be sustained. The receipt of the subsidy cannot be a hurdle in our taking the view, which we are taking as we are called upon to decide the actual scope of the provision in this appeal. While we do not discount the fact that subsidy may have been given the actual interpretation of the provision is a task, which we cannot abdicate. The answer to the substantial question of law no.1 is given in favour of the revenue/appellant by holding that merely because a No Objection Certificate has been obtained from the Pollution Control Board, the conditions under Section 80-IC will not be fulfilled. - Decided against assessee - Income Tax Appeal No.09 of 2012, Income Tax Appeal No.10 of 2012, Income Tax Appeal No.11 of 2012, Income Tax Appeal No.01 of 2016 - - - Dated:- 16-6-2016 - Hon ble K. M. Joseph, C.J. And Hon ble V.K. Bist, JJ. For the Appellant : Mr. Hari Mohan Bhatia, Advocate For the Respondent : Mr. Pulak Raj Mullick, Advocate ORDER K. M. Joseph, C.J. (Oral) These four appeals, under Section 260-A of Indian Income Tax Act, 1961 (hereinafter referred to as the Act) relate to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an asseesee sets up a hotel to claim the benefit of Section 80- IC clause (b) but it should also partake of ecotourism. It is this view which has been finally overturned by the tribunal and the tribunal has proceeded to instead hold inter alia, as follows:- 4.1 The second question is-whether the deduction is available in case of a hotel which does not take steps towards ecological balance? The issue stands covered by the decision of A Bench of Delhi Tribunal in the case of Shir Bidhi Chand Singhal vs. ITO in ITA No.3419(Del)/2009 for assessment year 2006-07, dated 04.11.2010, a copy of which has been placed on record and which is authored by my learned brother. The issue has been decided in favour of the assessee. Therefore, following this decision, it is held that the assessee is entitled to deduction u/s 80-IC of the Act For the sake of ready reference, paragraph nos.5 and 6 of the aforesaid decision are reproduced below:- 5. We have heard both the parties, gone through the assessment order and order of CIT(A) and relevant provisions which have been referred by the AO and CIT(A). The provisions as contained in section 80IC and as relevant to the case of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As far as Ecotourism is concerned, in fact, he drew our attention to the guidelines for Ecotourism in and around protected areas issued by Ministry of Environment Forests, Government of India. He would submit that this was brought out in the year 2006. He would submit, however, that considerable light is shed by the said document. It provides inter alia, as follows: 1.1 Ecotourism is defined as responsible travel to natural areas that conserves the environment and improves the well-being of local people . Given the conditions in India, we propose that ecotourism includes tourism that is community based and community driven. The aim should to move towards a system of tourism around protected areas which is primarily community based tourism. Such tourism is low-impact, educational, and conserves the ecology and environment while directly benefitting the economic development of local communities. 1.3 Ecotourism, when practiced correctly, is an important economic and educational activity. It has the scope to link to a wider constituency and build conservation support while raising awareness about the worth and fragility of such ecosystems in the public at large. It also pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of Commerce Industry (Department of Industrial Policy Promotion) New Delhi, dated 7th January, 2003 Office Memorandum Subject: New Industrial Policy and other concessions for the State of Uttaranchal and the State of Himachal Pradesh. The Hon ble Prime Minister, during the visit to Uttaranchal from 29th to 31st March, 2002, had, inter- alia made an announcement that Tax and Central Excise concessions to attract investments in the industrial sector will be worked out for the Special Category States including Uttaranchal. The industries eligible for such incentives will be environment friendly with potential for local employment generation and use of local resources. 2. 3. Accordingly, it has been decided to provide the following package of incentives for the States of Uttaranchal and Himachal Pradesh. 3.1 Fiscal Incentives to new Industrial Units and to existing units on their substantial expansion: (i) New industrial units and existing industrial units on their substantial expansion as defined, set up in Growth Centres, Industrial Infrastructure Development Centres (IIDCs), Industrial Estates, Export Processing Zones, Theme Parks (F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 3.1(i)(a) and (b) and also 3.1 (ii) would be available. In other words, the Thrust Industries would be entitled to the benefits of capital investment subsidy as contemplated in 3.1 (ii). What is more, the hotels in question have already been given the benefit of subsidy. Therefore, he would submit that the Act must be construed in the light of the Office Memorandum. The Office Memorandum declares benefits of outright excise duty exemption (this may not be applicable in the case of the assessees) or/and they are also entitled to 100% income tax exemption for the first five years and thereafter 30% for companies and 25% for other than companies for a further period of five years for the entire State of Uttaranchal. It is his contention that, therefore, 3.1(i) clause (b), which provides for income tax exemption, was given statutory incarnation by the insertion of Section 80-IC with effect from 01.04.2004. Therefore, the Section must be construed in the context of the policy of the Government of India in substance. The contention appears to be that unlike the area restrictions, which impact the new industrial units or existing industrial units covered by clause 3.1 (i), in regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be invoked in this case and the thrust being on the hotel, among other activities, an undue emphasis should not be given to the word Eco and rather the Court should discern the legislative intention by focusing on tourism. The business of running a hotel is associated with the concept of tourism and in realizing the tourism potential in the States of Uttarakhand and Himachal Pradesh and to encourage the activities associated with the tourism it is that the business of the hotels were sought to be encouraged. It is the contention, in fact that the only difference in the Office Memorandum dated 07.01.2003 and the item included in the 14th Schedule is the inclusion of the word including and it does not make any difference. As far as the relevance placed on the Government of India s Policy statement in regard to Ecotourism, he would submit that it relates to Ecotourism in the protected areas and it may have a bearing on the issues to be decided. Still, further he would submit that doctrine of blue pencil may be invoked in this case and in his attempt to do away with the word Ecotourism. 11. As far as arguments of Mr. Anil Jain, is concerned, he would draw our attention to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avoidable circumstances these solid non-biodegradable waste are transported to dumping sites earmarked by Nagar Palika. (c) FUEL EMISSION- There are no fugitive emission which enhance the ambient air quality. There is no air pollution and as such there will not be any negative impact on the air environment. (d) ROOF TOP RAIN WATER HARVESTING- The hotel has a proper roof top rain water harvesting system through proper pipes to recharge the aquifer i.e. roof top water is routed into land to recharge the ground water. The hotel also has proper tanks to conserve and utilize rain water for irrigation etc. the area, owing to its high hydraulic gradient is ground water scarce and requires to be supplemented by surface/rain water. The rain water collected from the clean roof of the building is suitable for different uses. The water descending from the roofs of the building through rain pipe is stored to irrigate the green area. The rain water is routed into ground through soakage pits thereby not letting the water go into waste drainage. (e) ENERGY EFFICIENCY-The hotel has been constructed and developed in a manner to provide good ventilation which reduce energy requirement. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) SOCIO-ECONOMIC DEVELOPMENT-More than 70% of the employees of the hotel are local residents/residents of Uttarakhand. All purchases of food and beverages, consumables, etc. are made locally Regular training programmes and awareness sessions for employees are held. All these steps taken by the hotel have enabled the local people to supplement their income, employment increase of knowledge and thereby improving the quality of life of the local people. (j) HEALTH AND SAFETY-The hotel ensures to maintain optimum standard of health and hygiene and proper fire fighting system for safety purposes. This is evidenced by way of certification of hotel premises from Government Health Officer, Nagar Nigam, Dehradun. The hotel has installed a proper and latest fire fighting system including proper fire escape routes, adequate underground and overhead tanks, sprinkler pumps, fire alarm system as per ISI Codes, fire pumps, wet arisers, supply independent circuit, fire hydrant line, portable fire extinguishers of ISI specification etc. The hotel has also obtained fire NOC from fire department, Dehradun. (k) OTHER ECO-FRIENDLY MEASURES-The hotel is plastic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowing the claim of deduction under sec.80-IC of the I.T. Act, 1961 by simply following the ITAT s decision in the case of Shri Bidhi Chand Singhal vs. ITO and that also without ascertaining that the assessee was issued NOC from Pollution Control Department? 2. Whether, on the facts and in the circumstances of the case, the ITAT was justified in allowing the claim of deduction under sec.80-IC of I.T. Act, 1961 without being satisfied that the assessee hotel was an eco- tourism hotel and not simply a commercial hotel located in a city following eco-friendly measures? 16. We have already referred to the order passed by the tribunal. The Income Tax Tribunal is the final fact finding authority under the scheme of the Act. The findings of fact in certain circumstances may give rise to a substantial question of law. We notice that the tribunal, in fact, has not laboured much on the facts of individual cases. 17. The Tribunal has essentially proceeded to dispose of the appeals in question by merely taking the view that in absence of the definition of Ecotourism, the hotel is to be construed as a hotel in respect of which there is a No Objection Certificate from the Pollution Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature has power to define a word even artificially. So the definition of a word in the definition section may either be restrictive of its ordinary meaning or it may be extensive of the same. When a word is defined to mean such and such, the definition is prima facie restrictive and exhaustive; whereas, where the word defined is declared to include such and such, the definition is prima facie extensive. When by an Amending Act, the word includes was substituted for the word means in a definition section, it was held that the intention was to make it more extensive. Further, a definition may be in the form of means and includes , where again the definition is exhaustive; on the other hand, if a word is defined to apply to and include , the definition is understood as extensive. The use of word any , e.g. any building also connotes extension for any is a word of very wide meaning and prima facie the use of it excludes limitation. But as stated earlier the word include may in exceptional cases be construed as equivalent to mean and include . Entry 22 added by the Gujarat Government to Part I of the Schedule to the Minimum Wages Act, 1948 furnished an illustration o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee Mr. Pulak Raj Mullick, in fact, particularly emphasized on the decision of the Hon ble Apex Court in the case of Ponds India Ltd. vs. Commr. Of Trade Tax, Lucknow reported in 2008(227) E.L.T. 497 (SC). There the Court was dealing with the case under the U.P. Sales Tax Act and the issue was whether petroleum jelly is a drug or a cosmetic within the meaning of the said Act. The Court inter alia, proceeded to hold as follows:- 15. Indisputably, a licence has been granted to the appellant under the provisions of the Act. A drug as defined in Section 3(b) thereof would not only include a medicine which is used for external use of human beings, but if used for prevention of any disease or disorder in human being, shall also come within the purview thereof. The said definition is an extensive one. It even applies to preparations applied on human body for the purpose of killing insects like mosquitoes, which per se does not have any medicinal or any value for during any disease or disorder in human beings. We may furthermore notice that Parliament consciously used a restrictive meaning while defining the term cosmetic but an extensive meaning has been given to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the definition enumerative but no exhaustive. That is to say, the term defined will retain its ordinary meaning but its scope would be extended to bring within it matters, which in its ordinary meaning may or may not comprise. Therefore, the use of the word means followed by the word includes in Section 2(bb) of the ID Act is clearly indicative of the legislative intent to make the definition exhaustive and would cover only those banking companies which fall within the purview of the definition and no other. Yet again in Commercial taxation Officer, Udaipur v. Rajasthan Taxchem Ltd. [(2007]) 3 SCC 124], it was held; 22. We have already extracted the definition of raw material under Section 2(34) which specifically includes fuel required for the purpose of manufacture as raw material. The word includes gives a wider meaning to the words or phrases in the statute. The word includes is usually used in the interpretation clause in order to enlarge the meaning of the words in the statute. When the word include is used in the words or phrases, it must be construed as comprehending not only such things as they signify according to their nature and impact but also those thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the entry, the purpose for which the product is used, the manner in which it has been dealt with under the relevant statute as also the interpretation thereof by the implementing authorities. 24. ..Wikipedia, like all other external aids to construction, like dictionaries etc, is not an authentic source, although the same may be looked at for the purpose of gathering information. Where an express statutory definition of a word exists, a Wiki definition cannot be preferred. It cannot normally be used for the purpose of interpreting a taxing statute or classification of a product vis- -vis an entry in statute. However, as a source of authority, Wikipedia is frequently cited by judges around the world. This is not restricted to India alone. The New York Times reports that beginning in 2004, more than 100 opinion in the States have cited Wikipedia, including 13 from federal appeals courts. Is this a good thing? There s a split of authority. Let us notice some. Said the Seventh Circuit s Judge Posner, who recently cited the online encyclopedia in this opinion: Wikipedia is a terrific resource ..Partly because it so convenient, it often has been updated r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs . 32. It may be mentioned that the Mimansa Rules of Interpretation were our traditional principles of interpretation laid down by Jaimini in the 5th Century B.C. whose Sutras were explained by Shabar, Kumarila Bhatta, Prabhakar, etc. The Mimansa Rules of Interpretation were used in our country for at least 2500 years, whereas Maxwell's First Edition was published only in 1875. These Mimansa Principles are very rational and logical and they were regularly used by our great jurists like Vijnaneshwara (author of Mitakshara), Jimutvahana (author of Dayabhaga), Nanda Pandit, etc. whenever they found any conflict between the various Smritis or any ambiguity or incongruity therein. There is no reason why we cannot use these principles on appropriate occasions even today. However, it is a matter of deep regret that these principles have rarely been used in our law Courts. It is nowhere mentioned in our Constitution or any other law that only Maxwell's Principles of Interpretation can be used by the Court. We can use any system of interpretation which hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l rule/test. - Legal theory that permits a judge to limit unreasonable aspects of a covenant not to compete. Severance of contract. - severance can be effected when the part severed can be removed by running a blue pencil through it without affording the remaining part. Attwood v. Lamont, (1920) 3 K 571 (Banking) A rule in contracts a Court may strike parts of a covenant not to compete in order to make the covenant reasonable. (Merriam Webster) Phrase referring to severance (q.v.) of contract. Severance can be effected when the part severed can be removed by running a blue pencil through it without affording the remaining part. Attwood v. Lamont, (1920) 3 KB 571. (Banking) . We, however, are of the opinion that the said doctrine cannot be said to have any application whatsoever in the instant case. Undoubtedly, the Payment of Gratuity Act is a beneficial statute. When two views are possible, having regard to the purpose, the Act seeks to achieve being a social welfare legislation, it may be construed in favour of the workman. However, it is also trite that only because a statute is beneficent in nature, the same would not mean that it should be construed in favour of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch. It is only derivatively and recently used to connote an article of luxury. One can assume that the coupling of these taxes under one entry was not fortuitous but because of these common characteristics. 75. Where two or more words are susceptible of analogous meaning are clubbed together, they are understood to be used in their cognate sense. They take, as it were, their colour from and are qualified by each other, the meaning of the general word being restricted to a sense analogous to that of the less general. As said in Maxwell on the Interpretation of Statues 12th Edn. P.289. Words, and particularly general words, cannot be read in isolation; their colour and their content are derived from their context . 76. Put in other words the included words may be clarificatory or illustrative of the general word. Thus in U.P. State v. Raja Anand; (1967) 1 SCR 362, while construing Art. 31A (2) as enacted by the Constitution (Seventeenth Amendment ) Act, 1964 the relevant excerpt of which read as:- 31-A.(2) In this article,- (a) the expression 'estate' shall in relation to any local area, have the same meaning as that expression or its local equiva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n activities in the State, having regard to the factors that it was fledgling State struggling to stand on its feet and to provide concessions in various forms so that the economy of the State may grow. It is bearing in mind both these aspects that we undoubtedly construe the provision in question. 26. Ordinarily, the use of the word include would mean an extension of the meaning. A general word followed by specified categories would mean that the Legislature includes within the scope of the provisions, things or persons or circumstances, which may ordinarily not come within the scope of the general word and thereby it would be a case where the meaning of the main words or the word with which the Section begins receives an expansive treatment at the hands of the law giver. It may also be a case where the use of the word include , will have the effect of the word giving an exhaustive meaning, that is, it may have effect of giving the word an exclusive definition, which would be exhaustive. In other words, use of the word includes could mean that it means nothing more than what is contemplated. In such a case, it would take the flavour of a definition clause which uses means ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntext of the States of Himachal Pradesh and Uttarakhand is clearly object driven and contextually apposite for the reason that both the States are hilly States and had and have vast untapped potential for natural and responsible tourism, which can be treated as Ecotourism. The word Eco is defined in Concise Oxford English Dictionary as representing Ecology . Ecology, in turn, is defined as the branch of biology concerned with the relations of organisms to one another and to their physical surroundings . 31. We must notice that the State of Uttarakhand is broadly dividable into the hilly areas and the plain areas. Can it not be said that the intention of the law giver was to promote Ecotourism, and towards that end, to encourage the setting up of hotels, spas, amusement parks and sites close to the nature in areas reflecting pristine beauty? Could it have been the intention of the Legislature to provide a right to a hotelier to claim deduction by setting up a hotel in a completely urban area, which is far remote from any signs of ecological beauty and natural surroundings, for which Uttarakhand is justly famous? In this regard, we must address the argument of the learned coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which issue we will address. 33. We are of the view that it is not the intention of the Legislature that any person who sets up a hotel within the time limits indicated in the State of Uttarakhand, without any regard to the exact location, and the manner in which it operates, its impact on the nature (environment), its relationship with the local people (local community), what it does for the people there, indiscriminately, all such hotels should be entitled to claim the benefit. It is true that the word Ecotourism includes hotels among other activities. We would think that in the context of this case, we would not be unjustified if we interpret the word hotel taking color and assistance from the word Ecotourism . The word Ecotourism , it must be noted, appears at the beginning of the provision. Obviously confronted with the obstacle it causes to the acceptance of the respondents argument, Mimansa Principles invoked in the decision of Ispat s case are relied on by Shri Pulak Raj Mullick. We have already extracted the relevant passage. Even applying the Mimansa Principles, we are at a total loss as to how any assistance would be derived from the principles laid down in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... air and water Pollution. By no means, can this be the sole determinant of the question, as to whether the hotel is engaged in Ecotourism. 35. Therefore, necessarily the order passed by the Tribunal cannot be sustained. The receipt of the subsidy cannot be a hurdle in our taking the view, which we are taking as we are called upon to decide the actual scope of the provision in this appeal. While we do not discount the fact that subsidy may have been given the actual interpretation of the provision is a task, which we cannot abdicate. 36. Even regarding the sites of the activities, we would think that it must have something to do with areas close to nature. No doubt, in the State of Uttarakhand, the area of natural beauty and areas close to nature, often overlapped in close proximity with developed areas. These are all matters we would leave to the authority. In view of the same, the order of the tribunal cannot be sustained and the matter must be redone. Accordingly, the impugned orders in all these cases will stand set aside. A request is made by the learned counsel for the assessee that if the matter is set aside and remanded, it be remanded not to the Tribunal but to the Ass ..... 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