9911796707
TMI Blog2016 (6) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, in the State of Himachal Pradesh or the State of Uttaranchal; or (iii) ...." 4. We mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 on the basis of No Objection from Pollution Department which can be treated to be a hotel eligible for deduction u/s 80-IC as per provisions of section 80- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess, 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 associated with Ecotourism as it has not embraced any steps which would bring it within the description of an Ecotourism hotel. We will be in the course of our judgment referring to some other assessment orders as also the orders of First App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 4/6 digit 1 2 3 4 5 15. Eco- tourism Hotels, resorts, spa, entertainment/amusement parks and ropeways 55101 9. He would point out that Annexure-2 which enumerates the Thrust Industry for the States of Uttarakhand and Himachal Pradesh contained Entry 15 and it provides for Ecotourism Hotels, resorts, spa, entertainment/amuseme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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 Policy of 2003, new tourism units like hotels, inter alia, were eligible for the benefits for concession for a period of five years. It is further stated that the word "Ecotourism" is not defined anywhere in the Act. It is more importantly contended that Entry 15 of the 14th Schedule, with which we are concerned, provides for Ecotourism including hotels, spas among other activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 beneficial to the biological environment. b. DISPOSAL OF SOLID WASTE/GARBAGE- The hotel has a proper policy for disposal of solid waste by way of segregation of solid waste into biodegradable waste (viz. waste vegetables, chilkas of vegetables etc.) and non-biodegradable waste (viz., polythene bags etc.) The biodegradable waste is converted into bio compost which is used as measure for gardening/plantation by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 architecture is used for the maximum use of the solar energy. (g) WATER CONSERVATION-Water conserving appliances are used by the hotel, such as low flow faucets, taps, water saving dual flush tanks in toilets, shower etc. The main source of water for the hotel is bore well. As per analysis of bore well water, the quality of ground water is quite good and is meeting the norms of drinking water class A as per national standard of drinking water. (h) SEWAGE-The domestic effluent is disposed throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot 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 the assessee that the subsidy was received; there is approval from the Pollution Control Board; there is also approval from District Tourism Department for exemption from luxury tax. The hotel has been classified as is exempted from luxury tax. He also drew our attention to Section 80-IB of the Act and contended that in the said provision, Sub-clause 11C contemplates the concept of excluded areas whereas in Section 80-IC there is no clause excluding any area as such, therefore, if the hotel is located in Dehradun, it would not have in any manner detract from the availability of deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied 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 words, the Office Memorandum contemplate the Thrust Industry being located in any part of the State of Uttarakhand, inter alia, entitling it to the benefits as we have already discussed. Therefore, the argument runs that whether it is located in a busy city like Dehradun or whether it is in the remote area in Chamoli or Uttarkashi, which are truly hilly areas, it hardly matters. 19. The other line of argument is that the words used in item 15 of 14th Schedule, contemplates the wider meaning being given to Ecotourism and it is for that purpose that the word 'including' was used after the word 'Ecotourism' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 prize chits by whatever name called and that a recurring deposit scheme without any element of prize was not a prize chit as defined in the Act. And in construing section 2(3) of the Rating Act, 1971 which defines 'Livestock' to include any mammal or bird kept for the production of food or wool or for the purpose of its use in the farming of land, the word livestock was not given the wide meaning (in contradiction to deadstock) to include any animal whatsoever and was held not to extend to thorough bred horses not kept for use in the farming of land. In holding so LORD KEITH observed: "There can be no doubt that in some cases the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prise" 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 "include" is used in a definition clause, it is used as a word of enlargement, that is to make the definition extensive and not restrictive. But the word "includes" is also used to connote a specific meaning, that is, as :means and includes" or "comprises" or "consists of". Yet again in Bharat Coop. Bank (Mumbai) Ltd. v. Coop Bank Employees Union [(2007) 4 SCC 685], it was held; "... It is trite to say that when in the definition clause given in any statue the word "means" is used, what follows is intended to speak exhaustively. When the word "means' is used in the definition, to borrow the words of Lord Esher, m.R. in Gough v. Gough it is a "hard-and-fast" definition and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owns, 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 considering the same from different angles. Different tests are laid down for interpretation of an entry in a taxing statute namely dictionary meaning, technical meaning, users point of view, popular meaning etc. It is true that the Court must bear in mind the precise purpose for which the statute has been enacted, namely, herein for the purpose of collection of tax, but the same by itself would not mean that an assessee would be made to pay tax although he is not liable therefor, or to pay higher rate of tax when is liable to pay at a lower rate. An exemption notification may require strict construction, but where a statute merely provides for different rates of tax, application of the principles of strict construction may no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 saw. These points must be kept in mind by us when we intend to rely on Wikipedia as a source of authority. 21. We may also notice the decision of the Hon'ble Apex Court in the case of Ispat Industries Ltd. vs. Commissioner of Customs, Mumbai reported in 2006 (202) E.L.T 561 (S.C.). There the Court was dealing with case under the Customs Traffic Act. In the course of the judgment, the Court lamented the ignoring of the Mimansa Rules of Interpretation, and held as follows: "18. Legal fictions are well-known in law. In the oft- quoted passage of Lord Asquith in East End Dwelling Co. Ltd. vs. Finsbury Borough Council (1951) 2 All ER 587, it was observed : "If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the conseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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'' from the contract and the rest of the contract enforced without them. Nearly all the cases arise in the context of restraint of trade, but the following principles are applicable to contracts in general" In P. Ramanatha Aiyar's Advanced Law Lexicon, 3rd Edn. 2005, Vol. l,p.553-554, it is stated: "Blue pencil doctrine (test). A judicial standard for deciding whether to invalidate the whole contract or only the offending words. Under this standard, only the offending words are invalidated if it would be possible to delete them simply by running a blue pencil through them, as opposed to changing, adding, or rearranging words. (Black, 7th Edn., 1999) This doctrine holds that if Courts can render an unreasonable restraint reasonable by scratching out the offensive portions of the covenant, they should do so and then enforce the remainder. Traditionally, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 indicates that what follows the word "including" comprises or is contained in or is a part of the whole of the word preceding. The nature of the included items would not only partake of the character of the whole, but may be construed as clarificatory of the whole. 74. It has also been held that the word 'includes' may in certain contexts be a word of limitation ( South Gujarat Roofing Tiles Manufacturers vs. State of Gujarat (1976) 4 SCC 601). In the context of Entry 62 of List II this would not mean that the word 'luxuries' would be restricted to entertainments, amusements, betting and gambling but would only emphasise the attribute which is common to the group. If luxuries is understood as meaning something which is purely for enjoyment and beyond the necessities of life, there can be no doubt that entertainments, amusements, betting and gambling would come within such understandi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 book BROOMS'S LEGAL MAXIMS. "It is a rule laid down by Lord Bacon that copulatio verborum indicat acceptationem in eodum sensu-the coupling of words together shows that they are to be understood in the same sense. And, where the meaning of a particular word is doubtful or obscure, or where a particular expression when taken singly is inoperative, the intention of the party who used it may frequently be ascertained by looking at adjoining words, or at expressions occurring in other parts of the same instrument, for qua non valeant singular juncta juvant-words which are ineffective when taken singly operate when taken conjointly: one provision of a deed, or other instrument, must be construed by the bearing it will have upon another." 25. It is in the light of the above discussion that we must now proceed to appreciate the contentions of the parties. We are dealing with the provision in the Act, which provides for a benefit in the form of a deduction. Therefore, this i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erstanding 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 management of tourism such that the environment is preserved. The income from tourism adds to the investment into the landscape conservation". In Merriam Webster's Online dictionary, Ecotourism is defined as the practice of touring natural habitats in a manner meant to minimize ecological impact. We also notice that Assessing Officer has referred to the definition given by the State Government in its Ecotourism Planning, Development and Management Document, as "Eco Tourism is responsible travel to natural areas that conserves the environment and sustains the well being of local people". 30. We remind ourselves that a Court must always guard against an interpretation which will render any part of any provision redundant or superfluous. In regard to the States of Uttarakhand and Himachal Pradesh, we must, therefore, proceed on the basis that the word "Ecotourism", has been carefully and guardedly chosen in contradistinction to the word "tourism". Quite clearly Ecotourism cannot be the same as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 should answer the description of a nature friendly, Eco-friendly hotel. Some of the other criteria, which are relevant would be, whether in the context of its business, it causes no harm or the least harm to its surroundings; whether it provides employment to the local population; whether it develops local culture and arts; does it produce the least impact on environment; whether it resorts to recycling; what steps it takes towards the energy efficiency and water conservation; does it enhance the cultural and economic set up and integrity of local people; does it promote sustainable use of biodiversity and conservation of cultural diversity? In one case, [ITA No.09 of 2012], in answer to the query, the assessee would write that the hotel is connected to the City sewer system. Solid garbage waste, it is answered, is disposed of in the city garbage container. We have no hesitation in saying that the fact that it is connected to the City sewer system and that the solid garbage waste is disposed of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 result. Only hotels, which were setup as Ecotourism units or having set up as Ecotourism or units, were expanded as such, would be entitled to the benefit of 80-IC. We would think that the soul of the provision is Ecotourism. Various forms, in which Ecotourism may be practised and operated, are enumerated after the general word "Ecotourism". The activities mentioned specifically must share one common feature, i.e., they must be pursued as part of Ecotourism. This in our humble view is the interpretation, which would do justice to the words, the context and object of the statute. Certainly, the mere procurement of a No Objection from the Pollution Control Board cannot be determinative of a question, whether the hotel fulfills the requirement under Section 80-IC of the Act. May be, it is not in dispute, in fact, according to Shri Pulak Raj Mullick that for all hotels of a particular type, satisfying a particular requirement, no objection is required from the Pollution Control Board. In this context, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
