Ita/1/2016 Of Commissioner Of Income Tax v. M/S Aanchal Hotels Pvt. Ltd

IN THE HIGH COURT OF UTTARAKHAND AT NAINITALIncome Tax Appeal No.09 of 2012 Commissioner of Income Tax, Dehradun ..……Appellant Versus M/s Aanchal Hotels Pvt. Ltd. ……. Respondent Mr. Hari Mohan Bhatia, Advocate for the appellant. Mr. Pulak Raj Mullick, Advocate for the respondent. With Income Tax Appeal No.10 of 2012 Commissioner of Income Tax, Dehradun ..……Appellant Versus M/s Aanchal Hotels Pvt. Ltd. …. Respondent Mr. Hari Mohan Bhatia, Advocate for the appellant. Mr. Pulak Raj Mullick, Advocate for the respondent. With Income Tax Appeal No.11 of 2012 Commissioner of Income Tax, Dehradun ..……Appellant Versus M/s Aanchal Hotels Pvt. Ltd. ……. Respondent Mr. Hari Mohan Bhatia, Advocate for the appellant. Mr. Pulak Raj Mullick, Advocate for the respondent. With Income Tax Appeal No.01 of 2016 Commissioner of Income Tax, Dehradun ..……Appellant Versus Pankaj Nagalia …. Respondent Mr. Hari Mohan Bhatia, Advocate for the appellant. Mr. Anil Jain, Advocate with Mr. Pulak Raj Mullick and Mr. Risabh Jain, Advocates for the respondent. Coram: Hon’ble K.M. Joseph, C.J.Hon’ble V.K. Bist, J. 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 availability of the benefit of deduction contemplated under Section 80-IC of the Act for hotels which have been set up in the State of Uttarakhand. The order of the tribunal, which is impugned, proceeds on the reasoning that such benefit is available to those hotels which have obtained No Objection from the State Pollution Control Board. 2. In order to appreciate the contentions of the parties, we must at once set 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). 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)… 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 before the 1st day of April, 2012, in the State of Himachal Pradesh or the State of Uttaranchal; or (iii)….” 4. We must also advert to Entry 15 of the 14[th] Schedule which is referred to in clause b as that is the most crucial which we must consider. It reads as follows: “15. Eco-tourism including hotels, resorts, spa, entertainment/amusement parks and ropeways” (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 before the 1st day of April, 2012, in the State of Himachal Pradesh or the State of Uttaranchal; or (iii)….” 4. We must also advert to Entry 15 of the 14[th] Schedule which is referred to in clause b as that is the most crucial which we must consider. It reads as follows: “15. Eco-tourism including hotels, resorts, spa, entertainment/amusement parks and ropeways” 5. All the respondents/assessees have set up hotels in the District Dehradun. The capital of the State of Uttarakhand is located in Dehradun. Dehradun is a city located within the district of Dehradun. The hotels which are the subject matter of this litigation are mostly located in the city of Dehradun; some of them are located a little far away from the city. The Assessing Officer in all these cases proceeded to take the view that it is not sufficient that 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:- 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 are as under:- 80-IC. (1)…… 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 are as under:- 80-IC. (1)…… ….. ….. ….. 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 are as under:- 80-IC. (1)…… 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 are as under:- 80-IC. (1)…… ….. ….. ….. 6. From the above section and item no.15 of Part-C of the Fourteenth Schedule, it can be observed that what is eligible for deduction is eco-tourism which include inter-alia hotels. It has been the contention of the assessee that his hotel is approved by the Government. The hotel 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 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-IC. Therefore, we allow the claim of deduction u/s 80-IC to the assessee and the appeal of the assessee is allowed.” 6. We have heard Mr. H.M. Bhatia, learned counsel appearing for the revenue/appellant, Mr. P.R. Mullick, learned counsel for respondent in ITA No.9 of 2012, ITA No.10 of 2012 and ITA No.11 of 2012 and we further heard Mr. Anil Jain, Advocate with Mr. Pulak Raj Mullick and Mr. Risabh Jain, Advocates in ITA No.1 of 2016. 7. According to Mr. H.M. Bhatia, learned counsel for the appellant, the order of the tribunal cannot be sustained. It is his contention that the benefit under Section 80-IC (b) would be available to only those hotels where it is associated with Ecotourism. 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: 7. According to Mr. H.M. Bhatia, learned counsel for the appellant, the order of the tribunal cannot be sustained. It is his contention that the benefit under Section 80-IC (b) would be available to only those hotels where it is associated with Ecotourism. 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: 1.1Ecotourism 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.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 promotes the non-consumptive use of wilderness areas, for the benefit of local communities living around, and dependent on these fragile landscapes. 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 promotes the non-consumptive use of wilderness areas, for the benefit of local communities living around, and dependent on these fragile landscapes. 1.6 PRINCIPLES OF ECOTOURSIM IN AND AROUND PROTECTED AREAS PROTECTED AREAS Those who implement and participate in ecotourism activities should practice the following: activities should practice the following: Adopt low-impact wildlife tourism that protects ecological integrity of forest and wildlife areas, secures wildlife values of the destination and its surrounding areas Adopt low-impact 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 biodiversity richness, their values and their ecological services to people Highlight the heritage value of India’s wilderness and protected areas Highlight the heritage value of India’s wilderness and protected areas Build environmental and cultural awareness and respect awareness and respect Facilitate the sustainability of ecotourism enterprises and activities Facilitate the sustainability of ecotourism enterprises and activities Provides livelihood opportunities to local communities Provides livelihood opportunities to local communities -Use indigenous, locally produced and ecologically sustainable materials for tourism activities. 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.” delineated ecotourism zones’ delineated in the ecotourism plan.” Build environmental and cultural awareness and respect awareness and respect Facilitate the sustainability of ecotourism enterprises and activities Facilitate the sustainability of ecotourism enterprises and activities Provides livelihood opportunities to local communities Provides livelihood opportunities to local communities -Use indigenous, locally produced and ecologically sustainable materials for tourism activities. 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.” 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 answerthe 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 Appellate Authority, as we explore the various dimensions of the questions, which were called upon to answer. 8.The contrary view is canvassed before us very fervently by learned counsel. In fact, Mr. Pulak Raj Mullick, learned counsel for the respondent/assessee in some of the cases would point out that the Court may not be oblivious to the setting in which Section 80-IC was inserted in the Act. He drew our attention to the Office Memorandum dated 07.01.2003, issued by the Ministry of Commerce & Industry, Department of Industrial Policy & Promotion, New Delhi. It reads inter alia as follows: No. 1 (10)/2001-NER Government of India Ministry of Commerce & Industry (Department of Industrial Policy & Promotion) New Delhi, dated 7[th] 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 29[th] to 31[st] 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 (Food Processing Parks, Software Technology Parks, etc.) as stated in Annexure-I and other areas as notified from time to time by the Central Government are entitled to: (a)100% (hundred per cent) outright excise duty exemption for a period of 10 years from the date of commencement 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 exemption for a period of 10 years from the date of commencement 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 (a)100% (hundred per cent) outright excise duty exemption for a period of 10 years from the date of commencement 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 exemption for a period of 10 years from the date of commencement 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 inAnnexure-II are entitled to similar concessions asmentioned in para 3(i) & (ii) above in the entire Stateof 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. . . . . . . . 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/amusement parks and ropeways. He would, therefore, submit that the hotels which are set up in the State of Uttarakhand, would qualify as a Thrust Industry, drawing support from Clause 3.1.(iii). He would submit that being a Thrust Industry, without any area restrictions, if it is set up in the State of Uttaranchal (the State of Uttaranchal is known as State of Uttarakhand since 2007), the benefits contemplated under Clause 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 alsoentitled 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 the Thrust Industries, there is no such area restriction. Therefore, the contention is that hotels, which are located in any part of the State of Uttarakhand, would be entitled to the benefit of the income tax deduction under Section 80-IC (b). He reminds the Court that the hotels were set up by the assessees on the basis of what is the contained in the Office Memorandum, therefore, they had a legitimate 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 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 14[th] Schedule, with which we are concerned, provides for Ecotourism including hotels, spas among other activities as entitled for the benefit of deduction. He would submit that by employment of the word ‘including’ the intent was clearly to expand the scope of the word ‘Ecotourism’ and he would rely on the case law, which we would advert at the appropriate stage. To buttress his arguments that the view taken by the tribunal does not call for any interference, he would in fact, submit that the Mimansa Rules of Interpretation 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 theactivities 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 14[th] 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 the Assessment Order passed in his case. He would submit that by way of answer to the query of the Assessing Officer, the following reply was devised by him in ITA No.1/16, same is reproduced hereunder:- “5.0 Disallowance of deduction u/s 80IC of the I.T. Act, 1961 11. As far as arguments of Mr. Anil Jain, is concerned, he would draw our attention to the Assessment Order passed in his case. He would submit that by way of answer to the query of the Assessing Officer, the following reply was devised by him in ITA No.1/16, same is reproduced hereunder:- “5.0 Disallowance of deduction u/s 80IC of the I.T. Act, 1961 5.1 As mentioned in the brief facts of the case, the assessee claimed deduction u/s 80IC of the I.T. Act, 1961 by commencing 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 beneficial to the biological environment. 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 treating the waste in underground pits within hotel premises. Further the biodegradable waste is utilized for compost making which is further used for horticulture purpose within the hotel complex through vermiculture process. 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 treating the waste in underground pits within hotel premises. Further the biodegradable waste is utilized for compost making which is further used for horticulture purpose within the hotel complex through vermiculture process. The non-biodegradable waste is compacted through compactor to reduce the volume of the waste and then dispatched to scrap. During monsoon season and some other unavoidable 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. 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. The non-biodegradable waste is compacted through compactor to reduce the volume of the waste and then dispatched to scrap. During monsoon season and some other unavoidable 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. 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. The hotel is using quality CFLs and LED lights which are manufactured from non-hazardous material for lighting purposes and which also consume less power and are more energy efficient. All the lights and power points are shut down when not is use in order to conserve energy. Use of Incandescent lamps and halogen lamps have been avoided and energy 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 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 through municipal sewer line. The WC waste goes into government/municipal sewerage system. The hotel also has sewage treatment plant whereby solid waste is converted into manure/ compost and liquid effluent/ water is utilized for watering of plants. As such the hotel has a proper system of sewage disposal and recycling without causing any damage to environment. (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 (h) SEWAGE-The domestic effluent is disposed through municipal sewer line. The WC waste goes into government/municipal sewerage system. The hotel also has sewage treatment plant whereby solid waste is converted into manure/ compost and liquid effluent/ water is utilized for watering of plants. As such the hotel has a proper system of sewage disposal and recycling without causing any damage to environment. (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 free, whereby no polythene bags are used by the hotel. plastic free, whereby no polythene bags are used by the hotel. The parking space is much more than require by MDDA or as per National Building Code. This helps in avoiding traffic congestion, noise and vibration in the hotel premises.” 12. He would further submit that the Court may also consider 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 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 deduction under the said provision. 15. We are dealing with the appeals under Section 260-A of the Act. The appeal is successfully premised on the existence of a substantial question of law. The following question of law are raised: 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 deduction under the said provision. 15. We are dealing with the appeals under Section 260-A of the Act. The appeal is successfully premised on the existence of a substantial question of law. The following question of law are raised: 1. 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 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 Control Board. The question to be considered is whether this is supportable. 18. The State of Uttarakhand is a hilly State for the most part. It is also called the Land of the Gods (Dev Bhoomi). It was formed by carving out the area from the former undivided State of Uttar Pradesh 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 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. 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 14[th] 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’. The use of the word ‘includes’ has engaged the attention of the Courts from time to time. We may in this context refer to the Principles of statutory interpretation by Justice G.P. Singh’s 12[th] Edition, wherein it is inter alia, stated as follows: a) Restrictive and extensive definition The Legislature 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 facieextensive. 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 of such use. The entry refers to ‘Employment in Potteries Industries’ and is followed by an explanation which reads: ‘For the purpose of this entry potteries industry 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 of such use. The entry refers to ‘Employment in Potteries Industries’ and is followed by an explanation which reads: ‘For the purpose of this entry potteries industry includes the manufacture of the following articles of pottery namely-(a) Crockery, (b) Sanitary appliances, (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 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 language of an inclusive