JUDGMENT
Ajit Kumar Sengupta, J.
1. The petitioner is the owner of Oberoi Inter-Continental Hotel. The petitioner made an application on October 11/15, 1969, for approval under Section 84(3)/80J of the Income-tax Act, 1961, regarding Oberoi Inter-Continental Hotel. On June 10, 1970, the Central Government granted approval to Oberoi Inter-Continental Hotel for the purpose of Section 80J(6)(d) of the Act. The Income-tax Officer made the original assessment for the assessment year 1967-68 under Section 143(3) on March 24, 1972. The Income-tax Officer in the assessment held that the petitioner had fulfilled the conditions laid down in Section 84 of the Act and accordingly relief under that section would be available to the petitioner. The assessee preferred an appeal before the Appellate Assistant Commissioner in respect of the points where Income-tax Officer held against the petitioner. The Appellate Assistant Commissioner, however, set aside the assessment on November 30, 1973. On February 19, 1977, the petitioner made an application to the Secretary, Ministry of Tourism, for approval under Section 84(3) of the Act. The petitioner also made a similar application on February 23, 1977, to the Secretary, Ministry of Finance. The applications are in identical terms which are, inter alia, to the following effect 3
“We have received approval under Section 80J(6)(d) of the Income-tax Act, 1961, of our ‘Hotel Oberoi Inter-Continental’, vide letter No. F.No. 15/18/69-IT(AI), dated June 10, 1970, issued by Sri L. N. Gupta, Under Secretary to the Government of India, Ministry of Finance (Department of Revenue & Insurance), a copy of which is enclosed herewith. It will be evident from the copy of the said letter that ‘Hotel Oberoi Inter-Continental’ has been approved for the purpose of Clause (d) of Sub-section (6) of Section 80J of the Income-tax Act.
It may be noted here that Section 80J of the Income-tax Act is applicable from the assessment year 1968-69, as the said section has been brought into force with effect from April 1, 1968, and prior to that, Section 84 of the Income-tax Act was applicable to the business of the hotel. We have claimed before the Income-tax Officer deduction on account of tax holiday profits both under Section 84 of the Income-tax Act as well as under Section 80J of the said Act from the assessment year 1967-68 onwards. Deduction claimed under Section 84 has been proposed to be denied by the Income-tax Officer on the ground that your approval does not specifically state that the said hotel is also approved under Section 84(3) of the Act.
It may please be noted that Clause (d) of Sub-section (3) of Section 84 of the Income-tax Act has been replaced by Clause (d) of Sub-section (6) of Section 80J of the Income-tax Act, and since both the relative provisions are one and the same, your approval under Section 80J(6)(d) should also be considered as an approval under Section 84(3)(d). In the circumstances, we request you to kindly confirm the contention as correct and/or modify your order so as to consider your approval as an approval under Section 84(3)(d) also.”
2. On October 18, 1977, the Under Secretary of the Central Board of Direct Taxes informed the petitioner that the Board “regrets its inability to accede to your request in the matter”. Thereupon, the petitioner made a representation to the Chairman, Central Board of Direct Taxes on November 26, 1977. It has been stated in the said representation that the petitioner has complied with all the conditions laid down in Section 80J as well as Section 84(3) and accordingly there was no logical ground for rejection of the application of the petitioner for approval under Section 84(3)(d), In the said letter, the petitioner, inter alia, stated as follows :
“We, therefore, request you to look into the matter and reconsider the application as we feel that it is wholly unjustified to summarily reject the application for approval of the ‘ Hotel Oberoi Inter-Continental’ under Section 84(3)(d) when there is no change either in substance or in the words in the provision of Sub-section (3) of Section 84 of the
Income-tax Act, 1961, and the provision of Sub-section (6) of Section 80J of the Income-tax Act.
We hope that after reconsideration of the matter, you will be kind enough to grant approval of the application under Section 84(3)(d) of the Income-tax Act. However, if you want to reject this application again, we would request you to please give us an opportunity to represent the case by us on behalf of the company.”
3. Thereafter, a reminder was sent to the Secretary, Central Board of Direct Taxes, on July 22, 1978, but no reply was received.
4. During the pendency of the said representation before the Central Board of Direct Taxes, the Income-tax Officer completed the assessment for the assessment year 1967-68 and disallowed the claim made by the petitioner under Section 84 of the said Act. The Income-tax Officer has also disallowed the deficiency to be carried forward by applying Section 80J(3) of the Act. Against the said order, the petitioner preferred an appeal before the Appellate Assistant Commissioner which is pending.
5. The application was moved on September 26. 1978, challenging the order contained in the letter dated October 18, 1977, written by the Under Secretary, Central Board of Direct Taxes, and for grant of necessary approval of the Oberoi Inter-Continental Hotel under Section 84(3)(d) of the Act. Upon the said application, rule nisi was issued and an interim order was also passed to the effect that the appeal pending before the Appellate Assistant Commissioner may be heard but no final order should be passed and no demand on the basis of the assessment under appeal be enforced.
6. No affidavit has been filed in this case on behalf of the respondents.
7. Dr. Pal, learned advocate appearing for the petitioner, has contended that the provisions of Section 80J are virtually the same as those of Section 84 and, accordingly, the Board was not justified in refusing the approval to the hotel owned by the petitioner. He submits that this matter should not be left again to the discretion of the Board and the court should decide whether the petitioner is entitled to the approval under Section 84(3)(d).
8. Mr. Ram Chandra Prosad, learned advocate appearing for the respondents, has submitted that the court may set aside the order dated October 18, 1977, of the Central Board of Direct Taxes but the court should direct them to pass a fresh order according to law within the specified time.
9. I have considered the rival contentions. The matter is pending before the Board since November, 1977. No useful purpose will be served in
remanding the matter once again to the Board for fresh determination. The assessment year involved in this case is 1967-68. The provisions of Section 80J are virtually the same as those of Section 84 in all respects, except that Section 80J provides an additional tax benefit to the assessee to carry forward the deficiency in their profits in any year during the tax holiday period for being set off against the profit in the subsequent year, up to a specified period. Since the assessment year involved is 1967-68, Section 84(3) as it stood at the material time would be applicable. Section 84(3) lays down four conditions which are to be fulfilled by any hotel business to qualify for the relief under Section 84 of the Act. One of such conditions is that the hotel is, for the time being, approved for the purposes of Section 84(3) by the Central Government. The petitioner made the application for approval on October 11/15, 1969, during the assessment year 1968-69, when the new provisions of Section 80J came into force. Accordingly, in the application of the petitioner, it was specifically mentioned that the petitioner wanted the approval for the purpose of Section 84(3) as well as Section 80J(6) of the Act. No specific assessment year was mentioned in the said application. In response to the said application, the Board intimated as follows :
“I am directed to refer to the application dated October 11/15, 1969, from M/s, Ray & Ray, Chartered Accountants, made on your behalf on the above subject and to say that the Central Government approves ‘ M/s. Oberoi Inter-Continental Hotel’ owned by M/s. East India Hotels Ltd., Calcutta, for the purpose of Clause (d) of Sub-section (6) of Section 80J of the Income-tax Act, 1961.
The period and the extent to which deduction shall be allowed in computing the total income will be subject to the provisions of Sub-sections (1) and (2) of Section 80J of the Income-tax Act, 1961, and other conditions attached thereto.”
10. The Board did not mention in the said order as regards the approval of the hotel in terms of Section 84(3). The Income-tax Officer held in its original assessment order as follows :
“With regard to the claim under Section 84, the assessee company has fulfilled the conditions as laid down in Section 84 and, therefore, no income-tax is to be paid by the assessee on so much of the profits and gains derived from a business of a new hotel. The report of the Chairman for the year ended March 31, 1966, shows that the ultra modern luxury hotel which was under construction by the company at New Delhi was put into operation under tbe name and style of Oberoi Inter-Continental on October 1, 1965. So according to the director’s report as stated above, it is clear that the hotel business for the assessment year 1967-68 is the second year.
Apparently, there was no claim for the first year, i.e., for the assessment year 1966-67, and in my view the claim was not made as the company suffered loss and there was no benefit of carry forward of the deficiency to 1966-67. Hence, the assesses has claimed the benefit of the provisions of Section 84 in the revised return as the benefit of the carry forward of the deficiency has been given effect to for the assessment year 1967-68.”
11. The Board in rejecting the application of the petitioner for approval under Section 84(3) has not given any reasons. If the hotel was eligible for being approved by the Central Government for the assessment year 1968-69, it is not known why it should not be eligible for such approval for the earlier year. The conditions stipulated in Section 84(3) and Section 80J(6) were at the material time identical. The conditions were as follows :
“(a) the business of the hotel starts functioning on or after the 1st day of April, 1961, and is not formed by the splitting up, or the reconstruction, of a business already in existence or by the transfer to a new business of a building previously used as a hotel or any machinery or plant previously used for any purpose ;
(b) the business of the hotel is owned and carried on by a company registered in India with a paid-up capital of not less than five hundred thousand rupees;
(c) the hotel has such number and types of guest rooms and provides such amenities as may be prescribed, having regard to the population and the tourist importance of the place in which the hotel is located; and
(d) the hotel is for the time being approved for the purposes of this sub-section by the Central Government.”
12. It is nobody’s case that the petitioner did not fulfil the said conditions for the assessment year 1967-68. On the contrary, the finding of the Income-tax Officer is that the petitioner fulfilled all the conditions prescribed by Section 84. In the application made by the petitioner for approval, no assessment year was mentioned but reference was made to the provisions of Section 84(3) as well as of Section 80J(6). Section 84 provided, inter alia, that income-tax shall not be payable by an assessee on so much of his profits and gains derived from his industrial undertaking to which that section applied, as did not exceed 6 per cent. per annum on the capital employed therein computed in the prescribed manner. Section 80J was inserted in the Act and Section 84 was repealed by the Finance (No. 2) Act, 1967, with effect from April 1, 1968. Section 80J provides, inter alia, that where the gross total income of an assessee includes any profits and
gains derived from a newly established industrial undertaking, in computing the total income of the assessee, a deduction from such profits and gains shall be allowed of so much of the amount thereof as does not exceed the amount calculated at the rate of 6 per cent. per annum on the capital employed in the relevant accounting year. Sub-section (3) of Section 80J provides that where profits and gains of an industrial undertaking have not been sufficient in any year to absorb such deduction, such unabsorbed tax concession (which is called the deficiency) shall be carried forward to the following years and shall be set off against the profits and gains of such years subject to a limit of seven years. The earlier year from which deficiency can be carried forward is the previous year relevant to the assessment year commencing from April 1, 1967. It is, therefore, evident that the assessee has to be allowed tax concession admissible to it under Section 84 for the assessment year 1967-68. Although under the scheme of Section 84 there is no provision for carry forward of any deficiency to succeeding years for being set off against the profits and gains for those succeeding years, if there is any deficiency for the assessment year 1967-68, it has to be set off against the profits and gains in the assessment for the assessment year 1968-69 in accordance with the provisions of Section 80J. Thus, Section 80J(3) will have relevance also for the assessment year 1967-68.
13. The Board in rejecting the application of the petitioner for approval under Section 84(3) did not give any reasons. The Board should not have rejected summarily the application for approval without giving the petitioner an opportunity of being heard. Nor did the Board apply their mind to the facts of this case. When there is no change either in the substance or in the wording of the provisions of Sections 84(3) and 80J(6), there cannot be any logical ground for rejection of the application of the petitioner for approval under Section 84(3)(d). As a matter of fact, the averments made in the petition have not been denied by the respondents by filing any affidavit.
14. Having regard to the facts and circumstances of this case, I am of the view that the petitioner is entitled to succeed in this application. The rule is, therefore, made absolute. The order dated October 18, 1977, of the Central Board of Direct Taxes is set aside. The Central Government is directed to grant necessary approval to the Oberoi Inter-Continental Hotel owned by the petitioner under Section 84(3)(d) for the assessment year 1967-68. The Appellate Assistant Commissioner of Income-tax, the respondent No. 6, is directed to dispose of the appeal after the approval is granted by the Central Government. The approval shall be given within eight weeks from the date of communication of this order.
15. Let a plain copy of this order duly countersigned by an officer of this court be handed over to the learned advocate for the petitioner upon the undertaking to put up requisition for the certified copy and fresh folios and stamps.