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2019 (8) TMI 708 - HC - Income TaxDeduction u/s 80IB (7)(a) - Hotel business - income from Saloon - income from the saloon section by the appellant-hotel - Whether after holding the saloon activity as desirbale and CIT (A) holding it to be an integral part of the Hotel business which finding holds goods, the Tribunal is legally justified in holding that the receipts from saloon business are not derived from the hotel business? - HELD THAT:- The authorities below have examined the contract or franchisee agreement of the assessee with M/s. HLL, which has a separate and distinct identity from the hotel business of the appellant. The authorities below have also examined the decision of the Hon'ble Apex Court in the case of CIT vs. Sterling Foods [ 1999 (4) TMI 1 - SUPREME COURT ] wherein the Apex Court has inter alia held that the word "derived from" restricts the qualifying profits to the profits directly arising from the particular activity and not the receipts unrelated to the eligible business. There must be, for the application of the word "derived from", a direct nexus between profits and gains and the industrial undertakings. The authorities below therefore, came to the conclusion that because the appellant was not fulfilling any of the requisite conditions and the income was not directly derived from the business and had no direct nexus, the benefit of section 80IB (7)(a) of the Income Tax Act, 1961 was rightly denied. As such the assessee clearly was not eligible for it. Thus as the assessee failed to establish that the saloon business was the part and parcel of the core activity of the hotel business. - Decided in favour of the department and against the assessee.
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