TaxTMI 
TaxTMI 
2016 (6) TMI 1033
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.... out the relevant provisions of the Act. 3. Section 80-IC was inserted by the Finance Act, 2003 (32 of 2003) w.e.f. 01.04.2004. Sub-section (1) and sub- section (2) clause (b) provides inter alia as follows:- "80-IC. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub- section (2), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains, as specified in subsection (3). 2. This section applies to any undertaking or enterprise,- (a) ... (b) which has begun or begins to manufacture or produce any article or thing, specified in the Fourteenth Schedule or commences any operation specified in that Schedule, or which manufactures or produces any article or thing, specified in the Fourteenth Schedule or commences any operation specified in that Schedule and undertakes substantial expansion during the period beginning- (i) ... (ii) on the 7th day of January, 2003 and ending before the 1st day of April, 2012, i....
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....l cannot be approved by the Government without obtaining No Objection from the Pollution Department. There is no material on record to show that Pollution Department of the Government has not given No Objection to the assessee. It if is so, then, it cannot be said that the assessee is running a hotel which is outside the norms prescribed by the Pollution Department. If a plain reading is given to Item No.15 reproduced above, the eco-tourism inter- alia include hotels. No material has been brought on record to show that "eco-tourism" status has been granted to any other hotel and which status assessee does not have. If the logic applied by the Assessing Officer and CIT(A) is made applicable, then, the hotels which are not having the alleged "eco-tourism" status cannot be held to be entitled to deduction u/s 80-IC. If none of the hotels can be granted deduction u/s 80-IC, the item no.15 of Part C of the Fourteenth Schedule will be redundant. Therefore, in our opinion, in the absence of definition of "eco-tourism" the hotel as added into the Item No.15 of Part C is to be construed to be hotel situated in the State of Himachal Pradesh or the State of Uttaranchal having a valid licence ....
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....t wildlife tourism that protects ecological integrity of forest and wildlife areas, secures wildlife values of the destination and its surrounding areas - Highlight the biodiversity richness, their values and their ecological services to people - Highlight the heritage value of India's wilderness and protected areas - Build environmental and cultural awareness and respect - Facilitate the sustainability of ecotourism enterprises and activities - Provides livelihood opportunities to local communities - Use indigenous, locally produced and ecologically sustainable materials for tourism activities. 2.2.3 All ecotourism activities should take place only in delineated ecotourism zones' delineated in the ecotourism plan." He would, therefore, submit that the view taken by the tribunal that the matter will stand resolved with reference to the answer to the question as to whether the hotel has obtained No Objection from the Pollution Control Board, does not reflect the correct exposition of the law. According to him, the Assessing Authority has found that the hotels do not really answer the description of a hotel which is as....
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....cement of commercial production, (b) 100% income tax exemption for initial period of five years and thereafter 30% for companies and 25% for other than companies for a further period of five years for the entire States of Uttaranchal and Himachal Pradesh from the date of commencement of commercial production. (ii) All new industries in the notified location would be eligible for capital investment subsidy @ 15% of their investment in plant & machinery, subject to a ceiling of Rs. 30 lakh. The existing units will also be entitled to this subsidy on their substantial expansion, as defined. (iii) Thrust Sector Industries as mentioned in Annexure-II are entitled to similar concessions as mentioned in para 3(i) & (ii) above in the entire State of Uttaranchal and Himachal Pradesh without any area restrictions. ........ ........ Thrust Industries Included in Annexure II of O.M. No.1(10)/2001-NER Dated 7.1.2003 of New Industrial Policy and other concessions for the State of Uttaranchal and Himachal Pradesh. SI. No. Activity 4/6 digit Excise Classification Subclass under NIC classification ITC(HS)classification 4/....
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....ate expectation that they would get the full benefits, which were actually promised in the Office Memorandum, and this may be borne in mind when resolving the controversy at hand. In other words, contention of the respondent/assesses is that, in fact, the respondent/ assessee may have set up hotels in urban area in the capital city of Dehradun, is of no relevance at all and what is relevant is; whether the hotel was set up within the termini of time, which is provided in Section 80-IC. 10. Mr. Pulak Raj Mullick, learned counsel would also point out that the respondent/assessees have made further investments, amounting to expansion within the meaning of the section and, therefore, any denial of the deduction under Section 80-IC would be productive of grave injustice besides being illegal. The Government has, in fact, circulated the concessional industrial package to the tourism department in the State of Uttarakhand. The District Tourism Development Officer wrote to the Assistant Income Tax Commissioner, Circle Dehradun as to whether the hotel in question, is entitled to the benefit, and further opined that in the light of the Tourism Policy of 2001 and the State Industrial Polic....
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....cing the operation of hotel in the A.Y. 2005-06. The assessee, vide query number 1 of Notice u/s 142(1) dated 02-12-2011 was requested to justify his claim of deduction u/s 80IC of the I.T. Act, 1961. 5.2 The assessee vide his reply dated furnished the following reply to the query raised for justifying the claim: "With regard to claim of deduction u/s 80 80IC it is submitted that the hotel commenced operation in May 2004. The hotel is situated in state of Uttaranchal (now Uttarakhand). The hotel is an eco tourism hotel having proper ecological balance through good environmental management. The hotel has taken the under mentioned steps and measures required for being an eco tourism hotel. a. GREEN BELT-The total land area of the hotel is 4267.15 sq. mts. Of which more that 50% is green belt. A central park has been developed, in which the flowering and foliage, trees, shrubs have been planted along with suitable landscape. Green belt along the compound wall has been developed where 20 non deciduous, flowery and shady trees have been planted. The plantation of trees helps in maintaining proper ecological balance through greenery and god environment and are ....
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....efficient compact fluorescent lamps have been used for all common areas. The hotel has used 8MM thick, blue/grey reflective glasses in penetration during construction of hotel. These glass panels have high light transmission, but low solar heat inflow. This reduces the quality of heat inflow into the buildings, lessens cooling loads on air conditioners and induces energy saving. Passive Lighting System-Large facing windows are the easiest and cheapest way to increase light in a building, since the south side of a building receives the most sunlight. An open design with glazed apertures. Light shelves and light pies can transmit sunlight into building interiors. Passive Heating Systems-Absorption materials are built south facing walls to store heat during the day and then slowly release this heat at night. Sunspaces, glass rooms built on the south side of the buildings, provide up to 60% of winter heating. Proper ventilation allows the heat from the sunspaces to circulate through the rest of the building. (f) SOLAR ENERGY-Solar panels are installed from producing hot water which will save significant electrical energy. The passive solar architectu....
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....nsider the actual finding by the Assessing Officer. Same is reproduced hereunder: "5.5 The submissions of the assessee have been examined. The assessee has taken eco- friendly measures but the assessee established a hotel which is a stand alone hotel and not parcel of 'eco-tourism' actively/project. Therefore, deduction u/s 80IC of the I.T. Act, 1961 is not allowed to the assessee." 13. He would, therefore, submit that despite the finding that the assessee has taken Eco-friendly measures, the only reason for denying the benefits is that hotel is a stand-alone hotel and not a parcel of Ecotourism activity project. He would also emphasize that with regard to Thrust Industry in the Memorandum there is no reference to any geographical restrictions and having regard to the measures which have been taken by the assessee, nothing more remains, and even on the finding of the Assessing Officer, the denial of the benefit of the deduction, is patently unsustainable and, therefore, his case deserves differential treatment. 14. He also reiterated that it is a Thrust Industry and, therefore, the benefit of the deduction under Section 80-IC cannot be denied. It is also the case of ....
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....radesh by the State Reorganization Act, 2000. The appointed date is 09.11.2000 and as per the appointed date the Act came into force on 09.11.2000. It was, therefore, a new State. The industrial activity as such, is mostly confined to the areas comprising plains, most part of which is located in Dehradun, Haridwar and Udham Singh Nagar. There are also industrial areas in certain other districts. It is true that the Government of India issued the Office Memorandum in the year 2002 as we have noticed. It did promise certain benefits of the industrial units, which are located in certain areas, which are specified therein, namely, industrial estates, etc., and also allowed the Government to issue further notification providing for areas within which if an industry is located, it would be entitled to the benefits. They are known as Areas Specific Benefits. It is equally true that the Office Memorandum would bear out the assessees in their argument that the Government of India contemplated benefits for Thrust Industries located in the States of Himachal Pradesh and Uttaranchal (later Uttarakhand). The benefits for the Thrust Industries were without any geographical restrictions. In other....
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....ppliances, (c) Refractories, (d) Jars, (e) Electrical accessories, (f) Hospital wares, (g) Textile accessories, (h) Toys, (i) Glazed tiles'. Construing the explanation the Supreme Court held that the items included in it were plainly comprised in the expression 'potteries industry' which showed that the word 'includes' was not used to extend the normal meaning of this expression. For the same reason it was clear that the explanation was not added to indicate by way of abundant caution that the items included in it were comprised in 'potteries industry'. The conclusion was reached that the word 'includes' was used in the explanation in the sense of 'means' and the definition provided by the explanation was exhaustive. It was, therefore, held that Mangalore pattern roofing tiles manufactories were not covered by entry 22 as they were not included in the explanation. Similarly in construing the definition of 'Prize Chit' as contained in section 2(e) of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 the Supreme Court held that the inclusive definition was not intended to expand the meaning of 'Prize Chit' to cover all transactions or arrangements of the nature of pri....
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....pretation clause uses the word "includes", it is prima facie extensive. When it uses the word "means and includes', it will afford an exhaustive explanation to the meaning which for the purposes of the Act must invariably be attached to the word or expression." Almost to the same effect is the decision of this Court in N.D.P. Namboodripad (Dead) by Lrs. Union of India and others [(2007) 4 SCC 502], wherein the law was stated in the following terms: "18. The word "includes" has different meanings in different contexts. Standard dictionaries assign more than one meaning to the word "include'. Webster's Dictionary defines the word "include" as synonymous with "comprise" or "contain". Illustrated Oxford Dictionary defines the word "include" as: (i) comprise or reckon in as a part of a whole; (ii) treat or regard as so included. Collins Dictionary of English Language defines the word "includes" as: (i) to have as contents or part of the contents; be made up of or contain; (ii) to add as part of something elese; put in as part of a set, group or a category; (iii) to contain as a secondary or minor ingredient or element. It is no doubt true that generally when the word "....
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....r the purpose of manufacturing yarn. Thus, it is seen that as diesel is specifically and intentionally included in the definition of raw material by the legislature, the question that whether it is directly or indirectly used in the process of manufacture is irrelevant as argued by Mr Sushil Kumar Jain." In Associated Indem Mechanical (P) Ltd. Vs. W.B. Small Industries Development Corporation Ltd. and Others [(2007) 3 SCC 607], this Court held; "13. As the language shows, the definition of the word "premises" as given in Section 2( c ) of the Act is a very comprehensive one and it not only means any building or hut or part of a building or hut and a seat in a room, let separately, but also includes godowns, gardens and outhouses appurtenant thereto and also any furniture supplied or any fittings or fixtures affixed for the use of the tenant in such building, hut or seat in a room, as the case may be." 21. It is therefore, difficult to agree with Mr. Dwivedi that a medicinal preparation must be one which has the effect of curing a disease. While interpreting an entry in a taxing statute, the Court's role would be to consider the effect thereof, upon co....
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....Wikipedia. * Cass Suntein, a visiting professor at Harvard Law who once fixed an error on Posner's Wikipedia entry: I love Wikipedia, but I don't think it is yet time to cite it in judicial decisions...it doesn't have quality control. He told the Times that "if judges use Wikipedia you might introduce opportunistic editing" to influence the outcome of cases. * Kenneth Ryesky, a New York tax attorney, says "citation of an inherently unstable source such as Wikipedia can undermine the foundation not only of the judicial opinion in which Wikipedia is cited, but of the future briefs and judicial opinions which in turn use that judicial opinion as authority. * Stephen Gillers, NYU law professor and legal ethics guru: The most critical fact is public acceptance, including the litigants, he said. A judge should not use Wikipedia when the public is not prepared to accept it as authority. He said it's best used for "soft facts". * Lawerance Lessig, a Standford law professor urges using a system such www.webcitation.org that captures in time online sources like Wikipedia, so that a reader sees a "stable reference"-i.e., the same material that the writer sa....
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.... the Mimansa principles may be more suitable. One of the Mimansa principles is the Gunapradhan Axiom, and since we are utilizing it in this judgment we may describe it in some detail. 'Guna' means subordinate or accessory, while 'Pradhan' means principal. The Gunapradhan Axiom states : "If a word or sentence purporting to express a subordinate idea clashes with the principal idea, the former must be adjusted to the latter or must be disregarded altogether". 22. We may also refer to the judgment of Hon'ble Apex Court in Civil Appeal No.4327 of 2006 "Beed District Central Co-Operative Bank Ltd. vs. State of Maharashtra and Others". Therein the Court referred to the 'doctrine of blue pencil', and held as follows:- "The 'doctrine of blue pencil' was evolved by the English and American Courts. In Halsbury's Laws of England (4th Edn. Vol.9), p.297, para 430, it is stated: "430. Severance of illegal and void provisions - A contract will rarely be totally illegal or void and certain parts of it may be entirely lawful in themselves. The question therefore arises whether the illegal or void parts may be separated or "severed'' fro....
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....mployees' State Insurance Corporation, Trichur v. Ramanuja Match Industries, AIR (1985) SC 278)." 23. We may also refer, in this context, to the judgment of Hon'ble Apex Court passed by the Constitution Bench in the case of Godfrey Phillips India Ltd. & another vs. State of U.P. & others reported in (2005) 2 SCC 515. There the question arose in the context of Entry 62 of list 2 of the 7th Schedule of the Constitution and the question arose whether as to what is the concept of the word 'luxuries' figuring therein. Entry 62 of list 2 provides for legislative power to impose taxes on luxuries including taxes on entertainments, amusements, betting and gambling. The Court in the course of its judgment, inter alia, held as follows: "73. Having rejected the second premise contended for by Mr. Salve, the next question is whether the language of Entry 62 List II would resolve the issue. The juxtaposition of the different taxes within Entry 62 itself is in our view of particular significance. The entry speaks of "taxes on luxuries including taxes on entertainments, amusements, betting and gambling". The word "including" must be given some meaning. In ordinary parlance it indi....
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.... that area and shall also include] (i) -(ii) * * * (iii) any land held or let for purposes of agriculture or for purposes ancillary thereto, including waste land, forest land, land for pasture or sites of buildings and other structures occupied by cultivators of land, agriculture labourers and village artisans; this Court said: (SCR p.368 C) "In our opinion the word "including" is intended to clarify or explain the concept of land held or let for purposes ancillary to agriculture. The idea seems to be to remove any doubts on the point whether waste land or forest land could be held to be capable of being held or let for purposes ancillary to agriculture." 83. Hence on an application of general principles of interpretation, we would hold that the word "luxuries" in Entry 62 of List II means the activity of enjoyment of or indulgence in that which is costly or which is generally recognized as being beyond the necessary requirements of an average member of society and not articles of luxury." 24. While on the subject of NOSCITUR A SOCIIS, Mr. H.M. Bhatia, learned counsel for the appellant, drew our attention to the following commentary in the ....
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....des' or including could also bear a restrictive meaning. It would depend upon the context of the provision. See in this regard the decision of the Hon'ble Apex Court in Godfrey Philip's case. 27. We may not be justified in accepting Shri Pulak Raj Mullick's contention that this is a case where there is a fiction introduced. It is true that when a fiction is introduced in law, the Court's mind must not boggle when it comes to give effect to the fiction but it is not a case of a fiction. 28. In this context, we must examine the ideas of Ecotourism as it is understood. We have already adverted to the Government of India's understanding of Ecotourism in relation to the protected areas, in the judgment. We have also referred to some extracts from Wikipedia, which we do note, may be fraught with the danger, which has been pointed out by the Hon'ble Apex Court and which we have already adverted to. Nonetheless, we could safely refer to the following as it appears to accord with the understanding of the concept by the Government of India. 29. We may also notice that Ecotourism, in fact, is defined in the Geographical Dictionary of Oxford University Press as "Development and manage....
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....ased on the absence of any geographical restrictions in regard to the Thrust Industries. We must notice that it appears to us to be more probable that the intention was to free the Thrust Industries from the geographical restrictions, which were relevant in regard to the industrial units, which are referred to in clause 3.1.(i). In regard to the same, undoubtedly, the geographical restrictions were applicable. In regard to the Thrust Industries when it was said in the Office Memorandum that it will be without geographical restrictions, and subsequently Section 80-IC was inserted, no doubt, without any geographical restrictions, we are left to ponder and answer the question as to whether such restrictions would not inevitably flow from the company the word hotel keeps and the use of the word "including". 32. One way of looking, no doubt, is that any hotel be it a five star hotel, which harnesses the most modern methods, and with little regard for the environment, but boosts tourism, would be entitled to benefit under Section 80-IC. The other way to look at this is that both in terms of site of location, and also for the manner, in which the hotel business is carried out, it shoul....
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....t appears to be that subordinate accessory must be rendered subservient to the principle. There can be no quarrel with the same but that involves an answer to the question which is the principle. In fact, the acceptance of the assessee's argument would render it necessary for us to delete the word "Eco". 34. We would think that neither the blue pencil theory nor the Mimansa theory can be of any assistance to the assessee. The blue pencil theory is premised on the principle of severance and it is true that it is evolved to separate that which is illegal from that which would pass muster. In such circumstances, it is at the heart of the doctrine of severability. We can have no quarrel with the said principles, but its application to the facts of this case is totally without foundation when the Legislature has deliberately intended Ecotourism to be at the heart of its decision to give a deduction. We are at a loss as to how it can be itself done away in order to provide for deduction to a hotel, which is merely engaged in tourism and not Ecotourism. In other words, we are of the view that in the setting in which Entry 15 of 14th Schedule appears, it should yield the following resul....