The order of the Bench was delivered by
N.R.S. Ganesan (JM)-This appeal of the assessee is directed against the order of the Administrative Commissioner dated 31-03-2014 and pertains to assessment year 2009-10.
2. Shri P.K. Sasidharan, the ld.representative for the assessee submitted that the assessing officer by an order u/s 143(3) of the Act allowed the claim of the assessee u/s 80IB of the Act. However, the Administrative Commissioner found that the assessee is not eligible for deduction u/s 80IB for the year under consideration. Referring to the approval granted by the DGIT (Exemption), the copy of which is available at page 6 of the paper book, the ld.representative submitted that the approval was granted with effect from 12-04-1999 which is relevant for the assessment year 2000-01. The assessee is eligible for exemption for 10 assessment years. Therefore for the year under consideration, according to the ld.representative, the assessee is eligible for exemption.
3. Referring to section 80IA as it stood at the relevant point of time, the ld.representative submitted that the assessee was initially entitled for deduction u/s 80IA of the Act. According to the ld.representative, by Finance Act, 1999 with effect from 01-04-2000, section 80IA, as it was then existed was substituted by sections 80IA and 80IB. For the purpose of this appeal, according to the ld.representative, the provisions of section 80IA as it stood at the relevant point of time is relevant since the approval granted by the DGIT (Exemption) was on the basis of the provisions of section 80IA as it stood then.
4. Referring to section 80IA(4)(iiia) of the Act, as it stood at the relevant point of time, the ld.representative submitted that the assessee’s eligible business is entitled for exemption u/s 80IA of the Act since the hotel is situated in the hilly area. Referring to sub clause (v) of section 80IA(4), the ld.representative submitted that approval by the prescribed authority is an essential precondition for claiming deduction u/s 80IA. The prescribed authority, according to the ld.representative, is the DGIT (Exemption). According to the ld.representative, section 80IA(4)(iiia) and section 80iA(4)(v) provides for twin condition to be fulfilled for the purpose of claiming deduction u/s 80IA of the Act. According to the ld.representative, mere starting a hotel is not sufficient for claiming deduction u/s 80IA. The approval of the DGIT(Exemption) is an essential pre-condition. Therefore, according to the ld.representative, the initial year for grant of deduction u/s 80IA shall be the year for which the approval was granted by the DGIT (Exemption). Since the DGIT (Exemption) specifically says that the approval was with effect from assessment year 2000-01, according to the ld.representative, the assessee is eligible for exemption for the year under consideration. Referring to section 80IA(6)(ii), the ld.representative submitted that the assessee is eligible for exemption for 10 assessment years for claiming deduction u/s 80IA of the Act. Referring to sub clause (iv) of section 80IA(6), the ld.representative submitted that the words “consecutive assessment years” have been omitted in sub clause (ii) of section 80IA(6). The Administrative Commissioner by referring to section 80IB of the Act which was subsequently introduced to substitute the then existing section 80IA observed that the assessee is eligible for exemption only for the consecutive assessment years. According to the ld.rperesentative, the words “consecutive assessment years have been specifically omitted in section 80IA(6)(ii) of the Act. Referring to section 80IA(12) of the Act, more particularly sub clause (i) of clause (c), the ld.representative submitted that the initial assessment year has been defined as the year in which the business of hotel starts functioning. But mere functioning of the hotel is not eligible for exemption u/s deduction u/s 80IA. The approval from the DGIT (Exemption) is one of the preconditions provided for claiming exemption. Therefore, according to the ld.representative, the initial assessment year shall be the year in which the approval was granted by the DGIT (Exemption) and not the assessment year in which the assessee started functioning the hotel. Therefore, according to the ld.representative, the Administrative Commissioner is not justified in revising the order of the assessing officer by exercising his jurisdiction u/s 263 of the Act.
5. On the contrary, Shri M Anil Kumar, the ld.DR submitted that initial assessment year has been defined in section 80IA(12)(c) of the Act. As per this section, the initial assessment year is the year in which the business of hotel starts functioning. Referring to section 80IA(6) of the Act, the ld.DR submitted that the number of assessment years referred to in sub section (1) shall be that including the initial assessment year. Therefore, for the purpose of claiming deduction the initial assessment year is the year in which the assessee started functioning its hotel and not the year in which the approval was granted. According to the ld.rDR, though approval is one of the pre-conditions to be fulfilled for grant of deduction u/s 80IA of the Act, the initial assessment year for claiming the deduction shall be the year in which the assessee started functioning its hotel. According to the ld.DR, since the legislature has defined initial assessment year as the year in which the business of hotel started functioning, the date of approval granted by DGIT (Exemption) cannot be taken as the initial assessment year. Therefore, according to the ld.DR, the CIT has rightly revised the order of the assessing officer.
6. We have considered the rival submissions on either side and also perused the material available on record. From the material available on record it appears that the assessee started its hotel business from the assessment year 1999-2000. This is not in dispute. If the initial assessment year for claiming deduction u/s 80IA is taken as 1999-2000, then the ten assessment years expired by assessment year 2008-09. Therefore, the assessee may not be eligible for exemption for the year under consideration. If we take the initial assessment year as 2000-01 from the year in which the approval was granted by the prescribed authority, viz. DGIT (Exemption), then the assessee may be eligible for deduction u/s 80IA of the Act. Thus, the actual dispute confines only to the issue as to what was the initial assessment year for which the assessee was eligible for claiming deduction u/s 80IA of the Act? In other words, whether the initial assessment year is the year in which the assessee started functioning its business or the year in which the prescribed authority granted approval u/s 80IA of the Act for the claiming deduction u/s 80IA of the Act?
7. We have carefully gone through the provisions of section 80IA as it stood at the relevant point of time, which reads as follows:
“80-IA (1) Where the gross total income of an assessee includes any profits and gains derived from any business of an industrial undertaking or a hotel or operation of a ship or developing, maintaining and operating any infrastructure facility or scientific and industrial research and development or providing telecommunication services whether basic or cellular including radio paging, domestic satellite service or network of trunking and electronic data interchange services or construction and development of housing projects or operating an industrial park or commercial production or refining of mineral oil in the North Eastern Region or in any part of India on or after the 1st day of April, 1997 (such business being hereinafter referred to as the eligible business), to which this section applies, 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 of an amount equal to the percentage specified in sub-section (5) and for such number of assessment years as is specified in sub-section (6).
(2) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
(3) (i) to (iii) xxxxxxxxxxxxxxxxxxxxxxxxxxx
(iiia) the business of the hotel, located in a hilly are or a rural area or a place of pilgrimage or such other place s the Central Government may, having regard to the need for development of infrastructure for tourism in any place and other relevant considerations, specify for the purpose of this clause, starts functioning at any time during the period beginning on the 1st day of April, 1997 and ending on the 31st day of March, 2001;
Provided that nothing contained in this clause shall apply to any hotel located at a place within the municipal jurisdiction (whether known s a municipality, municipal corporation, notified area committee, town area committee or a cantonment board or by any other name) of Calcutta, Chennai, Delhi and Mumbai;
(iv) to (iva) xxxxxxxxxxxxxxxxxxxxxxxxxx
(v) the hotel is for the time being approved by the prescribed authority.
(4A) to 5(i)(id)xxxxxxxxxxxxxxxxxxxxxxxx
(iia) in the case of hotel referred sub clause (iiia) of section 4, fifty per cent of the profits and gains derived from the business of such hotel:
Provided that the said hotel is approved by the prescribed authority for the purposes of this clause in accordance with the rules made under this Act;
(iii) to (vi) xxxxxxxxxxxxxxxxxxxxxxxxxxxxx
(6) The number of assessment years referred to in sub-section (1) shall, including the initial assessment year, be-
(i) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
(ii) ten in the case of an assessee, not being a co-operative society, deriving profits and gains from an industrial undertaking specified in sub-clause (a) or sub-clause (b) or sub-clause (d) of clause (iv) of sub-section (2) or located in an industrially backward district of Category A specified in sub-clause (c) of clause (iv) of that sub-section;
(iia) to (12)(b) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
(c) “initial assessment year”-
(1) In the case of an industrial undertaking or cold storaqe plant or ship or hotel, means the assessment year relevant to the previous year in which the industrial undertaking begins to manufacture or produce articles or things, or to operate its cold storage plant or plants or the ship is first brutht5 into use or the business of the hotel starts functioning;
(2) to (6) xxxxxxxxxxxxxxx
(ca) to (g) xxxxxxxxxxxxxxxxxxxxxxxxxxx”
8. From the above provision it is obvious that the assessee is eligible for deduction u/s 80IA (now section 80IB) for ten assessment years from the initial assessment year. Initial assessment year has been defined in section 80IA(12)(c)(i) of the Act. From this it is obvious that the initial assessment year is the year in which the business of hotel started functioning. It does not say that the year in which the approval was granted by the prescribed authority. Of course, the approval of the prescribed authority is also one of the pre-conditions for claiming deduction u/s 80IA of the Act in view of section 80IA(4)(v) of the Act. Section 80IA(6) clearly sys that the number of assessment years referred to in sub section (1) shall be including the initial assessment year. Therefore, for the purpose of taking the initial assessment year, the approval of the prescribed authority may not be relevant. The assessee may not be eligible for deduction u/s 80IA if the approval of the prescribed authority was not obtained for the initial assessment year. But that does not mean that the initial assessment year has to be excluded from the provisions of the Act. Taxation statute has to be interpreted on the basis of plain language employed by the legislature. The authorities / courts have no power to insert or delete any word in the statute as enacted by the Parliament. Of course, a harmonious reading has to be made to give effect to all the provisions of the Act without omitting any clauses of the sub clauses in the Act. A harmonious reading of the Act clearly says that though the approval of the prescribed authority, viz. the DGIT(Exemption) is a pre-condition, the initial assessment year shall be the year in which the assessee hotel started functioning for the purpose of computing ten assessment years for grant of deduction u/s 80IA of the Act. If the assessee could not obtain the approval of the prescribed authority, viz. DGIT (Exemption) for any of the years after started functioning of the hotel, then the assessee may not be eligible for deduction u/s 80IA for those assessment years. The assessee can claim deduction only in respect of the remaining assessment year from the year in which the approval was granted by the prescribed authority. A harmonious reading of section 80IA as it stood at the relevant point of time and the provisions of section 80IB, as it stands now, this Tribunal is of the considered opinion that the initial assessment year is the year in which the assessee started functioning of the hotel and not the year in which the approval was granted by the prescribed authority.
9. In view of the above, this Tribunal is of the considered opinion that the Administrative Commissioner has rightly exercised his revisional jurisdiction since grant of deduction u/s 80IB was not only erroneous but also prejudicial to the interest of revenue. Hence, the order of the Administrative Commissioner is confirmed.
10. In the result, the appeal of the assessee stands dismissed.
The order pronounced in the open court on 09th January, 2015.