December 2008
Hotel in a place of pilgrimage : Deduction u/s.80-IA(4)(iii) : Hotel certified by prescribed authority : IT Authority has no jurisdiction to decide on basis of own criteria that assessee not entitled to deduction
By K. B. Bhujle, Advocate
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28 Hotel in a place of pilgrimage :
Deduction u/s.80-IA(4)(iii) of Income-tax Act, 1961 : Hotel granted
certification by prescribed authority : Income-tax authority has no jurisdiction
to decide on basis of his own criteria that assessee is not entitled to
deduction u/s.80-IA(4)(iii).
[Gujarat JHM Hotels Ltd. v. DGIT (Exemption), 305 ITR
386 (Guj.)]
The petitioner’s hotel was located at S, which is an
important place of pilgrimage as required u/s.80-IA(4)(iii) of the Income-tax
Act, 1961. The petitioner made an application for exemption u/s.80-IA(4)(iii) of
the Act. In support of the necessary conditions the petitioner filed a
certificate issued by the Director, Tourism, Gujarat Govt., dated 18-6-1996 and
a certificate issued by the Department of Tourism, Govt. of India, dated
11-6-1996. The Director General of Income-tax (Exemption) rejected the
application. He observed that it was a well-known fact that S was an important
industrial town, having existent infrastructure/tourism facilities, to promote
industrial and tourism development and that a place like S did not require the
additional benefit of S. 80-IA(4)(iii).
The Gujarat High Court allowed the writ petition filed by the
petitioner and held as under :
“(i) A bare perusal of the documents furnished by the
petitioner vis-à-vis S. 80-IA(4)(iii) of the Act and Rule 18BBC made it
clear that the petitioner had fulfilled all the necessary conditions for grant
of the approval.
(ii) The authority had only considered that the petitioner
did not fulfil the pilgrimage test without dealing with the two certificates
issued by the prescribed authorities. Once the prescribed authorities grant
certificates, if the authority wants to reject it, valid and justifiable
reasons must be given therefor. Rejecting the application on merely
considering the fact whether S is a place which could be considered as
requiring approval for notification for promotion of pilgrimage, was an
extraneous consideration to the provisions of the Act and the Rules and the
benefit could not be refused to the petitioner on this ground.”
