Escapade Resorts P. Ltd. vs Assistant Commissioner of Income Tax

Antony Dominic, J—The issue raised in this appeal is regarding the correctness of the finding of the Tribunal in its order in I.T.A. No. 170 of 2014 that the initial assessment year for the purpose of section 80-IA of the Income-tax Act, 1961 is the assessment year 1999-2000. According to the senior counsel appearing for the appellant, the benefit of section 80-IA can be availed of only on satisfaction of condition No. (v) prescribing that the hotel is for the time being approved by the prescribed authority. It is pointed out that by annexure A order dated September 13, 2001, the prescribed authority granted approval only with effect from April 12, 1999, relevant to the assessment year 2000-01. On this basis, counsel contends that the order of the Tribunal affirming the orders of the lower authorities that the initial assessment year is 1999-2000 is incorrect.

Although this contention would appear to be attractive, we find that in section 80-IA itself, the term "initial assessment year" has been defined as the assessment year relevant to the previous year in which the hotel has started functioning its business. Admittedly, the hotel has started business in the previous year relevant to the assessment year 1999-2000. Therefore, even if the approval of the authority is with effect from April 12, 1999, the Tribunal could have decided the issue only in the light of the definition of the term "initial assessment year" contained in section 80-IA. If that be so, the view taken by the Tribunal that the initial assessment year is 1999-2000 cannot be faulted.

True, the assessee could have claimed the benefit of section 80-IA only after approval has been granted by the prescribed authority and that approval is only with effect from April 12, 1999. However, that does not enable the assessee or the Tribunal to postpone the initial assessment year which term is statutorily prescribed and fixed. On the other hand, if the prescribed authority had wrongly fixed the date of commencement of the business, it was for the assessee to get that error committed rectified in appropriate proceedings, which has not been done in this case. For these reasons, we do not find any illegality in the view taken by the Tribunal for us to entertain this appeal. The appeal fails and it is accordingly dismissed.