TMI Blog2020 (8) TMI 757X X X X Extracts X X X X X X X X Extracts X X X X ..... riteria are different in Section 80IA, 80IB deductions. The case laws are on different factual aspects and hence not applicable in the present case. CIT(A) also reiterated the same facts and correctly confirmed the Assessment order. There is no need to interfere with the observations made by the CIT(A) as the CIT(A) has given a detail finding after going through the facts and applying the provisions of Section 80ID of the Act, in assessee s case for non-eligibility of the deduction. Thus, appeal of the assessee is dismissed. - ITA No. 5722/DEL/2016 - - - Dated:- 24-8-2020 - SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER Appellant by : Sh. Sunil Arora, CA Respondent by : Ms. Rakhi Vimal, Sr DR ORDER PER SUCHITRA KAMBLE , JM This appeal is filed by the assessee against the order dated 29/09/2016 passed by CIT(A)-14, New Delhi for Assessment Year 2012-13. 2. The grounds of appeal are as under : - 1.Under the facts and circumstances of the case, the ld. First Appellate Authority has grossly erred in affirming the action of ld. A.O. disallowing the deduction amounting ₹ 56,03,969 u/s 801D of the Act, which is grossl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st day of March 2013. Thirdly, the said business is not formed by the splitting up, or the reconstruction, of a business already in existence. Fourthly, the eligible business is not formed by the transfer to a new business of machinery or plant previously used for any purpose. Fifthly, the eligible business is not formed by the transfer to a new business of building previously used as a hotel or a convention center, as the case may be. The Ld. AR submitted that the assessee has fulfilled all the conditions enumerated in section 80ID and the said deduction should be allowed to the assessee. The Ld. AR further submitted that from an analysis of Section 80ID, it emerges that the exemption is not for a builder who develops the hotel and his profit from development are not entitled to exemption. Similarly a contractor who is constructing the building is also not entitled to exemption u/s 80ID. Even the owner of a hotel property who receives lease or rent is also not entitled to exemption u/s 80ID. Exemption u/s 80ID is available only on the profits derived from operating the said hotel. The Ld. AR submitted that Section does not provide that the assessee should be the builder or owner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be entitled to benefit for the unexpired period of 5 years provided the undertaking is taken over as a running concern. The Ld. AR therefore prays that the exemption u/s 80ID has been wrongly denied by the revenue and appeals of the assessee be allowed. 6. The Ld. DR submitted that as per the facts of the case, neither there is any difficulty in understanding the language of the statute nor any complex interpretation of Section 80ID involved. Rather simply, the assessee has violated the provisions of the Act, and interpreted the Act according to his own benefits. Section 80ID of the Act provides for a five year tax holiday to new hotels of two, three and four star categories and convention centers. The Finance Act, 2008 vide CBDT Circular No 1/2009 dated 27.03.2009 extended the scope of tax benefits under the provisions of Section 80ID extended specified districts having a World Heritage Site, including Agra, UP, to new hotels of two, three and four stars categories from AY 2009-10. The assessee has initially violated the provisions of the Act by claiming deduction u/s 80ID for the AYs 2009-10 and 2010-11 without obtaining the two star categorization. In fact the major thrust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l also be important to ensure that intent of Legislature in bringing out the beneficial tax deduction provisions into statute should be the basis of formation of new hotel that would not result into any splitting or reconstruction of existing business. These are factual issues requiring verification of facts, which has been carried out in deep, as elaborately discussed in the body of the assessment order. The assessee failed to fulfill all the conditions laid down under sub-section (3) of Section 80 ID of the Act. The vital factors in determining the fulfillment of eligibility conditions laid down under the provisions of Section 80ID(3) of the Act and nature of business module adopted by the assessee to commence it operation is directly contradictory to each other as detailed in the assessment order. It will also be important to ensure that intent of Legislature in bringing out the beneficial tax deduction provisions into statute should be the basis of formation of new hotel that would not result into any splitting or reconstruction of existing business. The Assessing Officer has established that existing hotel building which was first given on rent for hotel business and then it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (1) shall be available only if - (i) the eligible business is not formed by the splitting up, or the reconstruction, of a business already in existence; (ii) the eligible business is not formed by the transfer to a new business of a building previously used as a hotel or a convention centre, as the case may be; (iii) the eligible business is not formed by the transfer to a new business of machinery or plant previously used for any purpose. Explanation.-The provisions of Explanations 1 and 2 to sub-section (3) of section 80-IA shall apply for the purposes of clause (iii) of this subsection as they apply for the purposes of clause (ii) of that sub-section; (iv) the assessee furnishes along with the return of income, the report of an audit in such form and containing such particulars as may be prescribed, and duly signed and verified by an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed. (4) Notwithstanding anything contained in any other provision of this Act, in computing the total income of the assessee, no deduction shall be allowed under any other sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page 51, there is a Form IV under UPVAT Act, 2008 submitted by Bharti Sehgal dated 25.10.2008 thereby stating that the said Bharti Sehgal has surrendered the registration certificate as the business of HOTEL Rani Mahal was closed w.e.f. 05.10.2008. But Form No. 10CCBBA as per Rule 18DE of the assessee which is at page 67 of the paper book mentioned the said property under the name HOTEL SIRIS 18 situated at C 2/3, Taj Nagri, Phase II, Agra 282001 commencing its operation on 08/2010. From the above facts it can be seen that the construction of the Hotel Rai Mahal was prior to April, 2008 and the earlier Hotel Rani Mahal was functioning till 04.10.2008. The business (Hotel SIRIS 18 AGRA) is formed by the leased agreement between the assessee and Bharti Sehgal which was thereafter sold by Bharti Sehgal to the assessee 08.06.2009. The assessee claimed the deduction from A.Y. 2009-10 till 2012-13. The assessee thus has commenced already established business by way of transfer to a new business of a building previously used as a hotel. The case laws submitted by the assessee are not on the issue of Section 80ID eligibility as the conditions/criteria are different in Section 80IA, 80IB ..... X X X X Extracts X X X X X X X X Extracts X X X X
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