TMI Blog2015 (4) TMI 1274X X X X Extracts X X X X X X X X Extracts X X X X ..... utsiders, the saloon cannot be said to be the integral part of the hotel activity. The same should be considered on indifferent business activity. We have also analyzed if the saloon activities i.e. hair dressing, hair dying, trading of the Lakme products this saloon by way of franchisee agreement are akin to the restaurant and bar sections of the said hotel business. In our opinion, the hair dressing/dying etc being related to cosmetics, shall not be equated to the food and drinking sections. These are necessities of the hotel business unlike saloon section which is merely desirable to hotel business. From this point of view also, the saloon section cannot be described having close nexus to the hotel activities. Therefore, the receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in derived from hotel business to be eligible for deduction as the same is derived from franchisee Business , because running a business under a franchisee agreement does not change its original character, nature name of business and be called only a franchisee Business as the franchisee is only a method of doing any business to take the advantage of Brand Name. 2. That it is unjustified to say that income from Saloon section cannot be taken to be profit and gain derived from Hotel Business, because CIT (Appeal) in his order his accepted that Saloon is an integral part of star categories hotel like that of assessee. 3. That it is unjustified to say that the saloon activity is not specifically approved by the presc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd claimed deduction u/s 80IB(7)(a) of the in respect of the related income too. During the assessment proceedings, AO allowed the claim of the assessee. However, on finding the rectifiable mistake the AO initiated rectification proceedings u/s 154 of the Act and passed an order dated 29.09.2009 denying the claim of deduction in respect of receipts from the said saloon activity. 3. The Ld. CIT (A) upheld the decision of the AO in the rectification order. The matter travelled to the Tribunal in the first round and the ITAT remanded the issue to the file of the Ld. CIT (A) for want of a speaking order. In the said speaking order dated 10.02.2011, the Ld. CIT (A) vide para 5.5.3 and para 6 of the impugned order held that the Saloon i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ol etc. further, he also argued stating that the deduction u/s 80IB(7)(a) of the Act, once granted in the initial year of the hotel business, the same cannot be denied in subsequent years. For this proposition he relied upon the basis of the Tribunal namely Aqua Plumbing Pvt. Ltd. 46 SOT 366 Agra and Tata Communication Internet Services Pvt. Ltd. ITA 4214/Del/2010 (Del). 6. On the other hand, Ld. DR for the revenue relied on the order of the Ld. CIT (A) and the rectification order of the AO. Shri Umesh Pathak, Ld. DR for the revenue submitted that the hotel in question was set up prior to March, 2001 and Saloon section started only the year 2006-07. For all the years i.e. prior to the A.Y. 2006-07, the hotel was running without Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to hotel business. Direct nexus has be demonstrated by the assessee. As discussed in the open court about the applicability of the ratio of the judgment of the Hon ble Supreme Court in the case of Liberty India all the receipts of the undertaking is not eligible for deduction under the relevant provisions. It is the ratio of the Supreme Court in the case of Sterling Foods (supra) that the receipts, which has a direct nexus to the core business activity are only eligible for deduction. With the saloon section, which started functioning in the year 2005-06 only cannot be considered integral part of the hotel business activity of the assessee which started prior to March, 2001. In the given case the core activity of the hotel business include ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tel receipts of the assessee. What is denied only in respect of a source of income i.e. saloon activity. Therefore, cited judgments by the assessee s counsel are misplaced. Thus, relevant arguments of the Ld. Counsel are dismissed. 8. Therefore, we are of the considered opinion that for above reasons also, the order of the Ld. CIT (A) fair and reasonable and it does not call for any interference. There is no issue raised before us by the assessee about the jurisdiction, qua the provisions of section 154 of the Act. Therefore, we are desist from entering into relevant debate. Accordingly, all the grounds raised by the assessee in both A.Ys. 2006-07 2007-08 are dismissed. 9. In the result, the appeals of the Assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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