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2016 (11) TMI 965 - HC - Income TaxDeduction u/s 80HHD - whether the reserve amounting to a sum of ₹ 44,68,966/- was properly utilized - Held that:- It is not in dispute that HRL has set up a new hotel which commenced business on April 1, 2002, i.e. to say in the same financial year in which the money was invested. It is also not in dispute that the prescribed authority has granted approval to HRL. The proceeds of the issue could be used for running of the new hotels under sub-clause (a) and could also have been used for the purpose of providing new facility for the growth of tourism in India. Tribunal did not record any finding that the money invested by the assessee or any part thereof to the share capital of HRL was utilised for any object which does not fall either within subclause (i) or sub-clause (ii). Unless such a finding is recorded, the benefit could not have been denied.The minutes of the meeting of the Board of Directors of HRL, held on March 28, 2003, shows that the funds were required by HRL for further diversification and expansion of the existing business. Expansion and diversification, according to us, are both activities pertaining to running of a hotel or any business for that matter. It could not, therefore, have been said that the reserve of a sum of ₹ 44,68,966/- was utilised by the assessee for a purpose not authorised by the statute.In that view of the matter, the addition was unwarranted altogether and the finding in that regard is arbitrary and perverse - Decided against revenue Addition of notional interest in respect of appellant’s balances with its subsidiaries - Held that:- Nothing is found from any of the judgments of the Assessing Officer, the CIT(A) or the learned Tribunal to show that the subsidiary (HRL) did not use its funds for the running of the hotel or for the purpose of providing for facilities for the growth of tourism in India nor is there any evidence to show that any part of the money due and owing by HRL to the assessee was spent for any personal business of any of the directors. Thus the addition made by the Assessing Officer and upheld by the CIT(A) and the learned Tribunal are not sustainable - Decided against revenue Rental income received - assessable as business income and not under the head ‘house property’ - Held that:- Hotel is obviously a business of the assessee. Terrace of that hotel was utilised for the purpose of installing a tower and the income arose out of the rental of the terrace. The business of the assessee is, in a sense, to let out the rooms to the guests for consideration, though strictly speaking in law it is not a case of letting out. It may be a case of licensing. Then can it be said that letting out of the terrace is not the business of the assessee? If the rental arising out of letting out of the terrace is to be treated as an income arising out of house property, the income arising out of letting out rooms of the hotel should also be similarly treated. The assessee is not prepared to have his income from hotel assessed as income arising out of house property. Therefore, the view taken by the learned Tribunal is a correct view. - Decided against assessee
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