Deduction 80IB(7)(b) Rule 18BBC certificate by Regional Director instead Director General of Tourism valid as in Government Departments powers are delegated. Since no Perform of the certificate has been prescribed in the Rules, non mentioning of section 80IB(7(b) can not be a ground for disallowance – ITAT
ABCAUS Case Law Citation:
959 2016 (06) ITAT
Assessment Year: 2007-08 and 2008-09
Dat/Month of Judgment/Order: June, 2016
Brief Facts of the Case:
The assessee company was in the business of Hotel. During the course of the scrutiny assessmentthe A.O. found that the assessee had claimed deduction u/s 80IB(7)(b) of the Income Tax Act, 1961. It was found that the assessee was classified as a five star hotel. However the AO noticed that the approval under Rule 18BBC had been accorded to the assessee by Deputy Director General instead Director General of Tourism. The assessee was asked to justify its claim of deduction u/s. 80IB(7)(b).
The assessee contended that it had applied for approval of the hotel and as per the procedure prescribed by the Govt. the approval has been signed by the appropriate authority. The interpretation of the rules 18BBC that the prescribed authority means only director general and not Dy. Director General was not in the spirit of law. In Govt. Organization the delegation of power is specific and the person authorized was only signing the documents. As such the deduction available u/s. 80IB cannot be denied for such a technical mater.
However, the AO was of the opinion that the certificates submitted by the assessee was not by the prescribed authority as provided u/s. 80IB(7)(b) and since the assessee had not fulfilled the eligibility criteria for claiming the deduction u/s. 80IB(7)(b), it cannot be allowed.
Assessee contested the matter before the CIT(A) but without any success.
The Tribunal observed that the assessee company fulfilled all the necessary conditions prescribed for grant approval and only bone of contention was the rule 18BBC(b) which refer to the prescribed authority as Director General in the Directorate General of Tourism, Government of India. It was also found that find that the relevant certificate had been issued by the Regional Director of Tourism on the recommendation of the Regional Classification Committee.