TaxTMI 
TaxTMI 
2018 (7) TMI 1079
X X X X Extracts X X X X
X X X X Extracts X X X X
....irm is engaged in the business of hotel. The year under scrutiny was the first year of commencement of its hotel business. During the year under scrutiny, it had achieved turnover of Rs. 52,81,068/- and had business loss of Rs. 3,02,96,276/-. The assessee has claimed deduction u/s.35AD of the Act. It is relevant to mention that the assessee has commenced its operation of business w.e.f. 17.11.2011 under the brand name "always" River view Hotel. The assessee thereafter applied for categorization as three-star hotel before the Ministry of Tourism under the aegis of Government of India on 07.06.2013. Such classification as a three-star hotel, was awarded by a letter dated 24.09.2013 issued under the signature of the Regional Director, Ministry of Tourism for the period of 11.09.2013 to 10.09.2018. 4. The AO rejected the claim of deduction as made by the assessee on the premise that the star certificate issued by the Tourism Department dated 24.09.2013 is beyond AY 2012-13. 5. The Ld.CIT(A) allowed the appeal preferred by the assessee against such order allowing the deduction as prayed for by the assessee under S.35AD of the Act on 21.04.2016. 6. Against the said order dated 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n authority or a board or a corporation established or constituted under any Central or State Act; (b) has been approved by the Petroleum and Natural Gas Regulatory Board established under sub-section (1) of section 3 of the Petroleum and Natural Gas Regulatory Board Act, 2006 (19 of 2006) and notified by the Central Government in the Official Gazette in this behalf; (c) has made not less than [such proportion of its total pipeline capacity as specified by regulations made by the Petroleum and Natural Gas Regulatory Board established under sub-section (1) of section 3 of the Petroleum and Natural Gas Regulatory Board Act, 2006 (19 of 2006)] available for use on common carrier basis by any person other than the assessee or an associated person; and (d) fulfils any other condition as may be prescribed; [(iv) where the business is of the nature referred to in sub-clause (xiv) of clause (c) of sub-section (8), such business,- (A) is owned by a company registered in India or by a consortium of such companies or by an authority or a board or corporation or any other body established or constituted under any Central or State Act; (B) e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r after the 1st day of April, 2011, in a new plant or in a newly installed capacity in an existing plant for production of fertilizer; [***]] [(af) on or after the 1st day of April, 2012, where the specified business is in the nature of setting up and operating an inland container depot or a container freight station notified or approved under the Customs Act, 1962 (52 of 1962); (ag) on or after the 1st day of April, 2012, where the specified business is in the nature of bee-keeping and production of honey and beeswax; (ah) on or after the 1st day of April, 2012, where the specified business is in the nature of setting up and operating a warehousing facility for storage of sugar; [***]] [(ai) on or after the 1st day of April, 2014, where the specified business is in the nature of laying and operating a slurry pipeline for the transportation of iron ore; (aj) on or after the 1st day of April, 2014, where the specified business is in the nature of setting up and operating a semi-conductor wafer fabrication manufacturing unit, and which is notified by the Board in accordance with such guidelines as may be prescribed ; [***]] [(ak) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f section 32, as if no deduction under this section was allowed, shall be deemed to be the income of the assessee chargeable under the head "Profits and gains of business or profession" of the previous year in which the asset is so used. (7C) Nothing contained in sub-section (7B) shall apply to a company which has become a sick industrial company under sub-section (1) of section 17 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) , during the period specified in sub-section (7A).] (8) For the purposes of this section,- (a) an "associated person", in relation to the assessee, means a person,- (i) who participates, directly or indirectly, or through one or more intermediaries in the management or control or capital of the assessee; (ii) who holds, directly or indirectly, shares carrying not less than twenty-six per cent of the voting power in the capital of the assessee; (iii) who appoints more than half of the Board of directors or members of the governing board, or one or more executive directors or executive members of the governing board of the assessee; or (iv) who guarantees not less than ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2); (x) bee-keeping and production of honey and beeswax; (xi) setting up and operating a warehousing facility for storage of sugar;] [(xii) laying and operating a slurry pipeline for the transportation of iron ore; (xiii) setting up and operating a semi-conductor wafer fabrication manufacturing unit notified by the Board in accordance with such guidelines as may be prescribed ;] [(xiv) developing or maintaining and operating or developing, maintaining and operating a new infrastructure facility;] (d) any machinery or plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if- (i) such machinery or plant was not, at any time prior to the date of the installation by the assessee, used in India; (ii) such machinery or plant is imported into India from any country outside India; and (iii) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of insta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to issue the star rating certificate from the date of application retrospectively and is issued on and from the date of signing of the certificate but it also does not mean that the hotel was operated for lower than three star category from the date of application till the issuance of three-star rated certificate. Naturally, in order to get the certificate, the assessee has designed the hotel rooms and all other amenities according to the terms and conditions specified for three-star hotel. As per provisions of section 35AD, the expenditure incurred wholly and exclusively for the purpose of any specified business shall be allowed as deduction during the previous year in which he commences operations. Accordingly, the assessee-firm commenced its specified business during the previous year relevant to AY 2012-13 and thus it claimed entire capital expenditure as deduction u/s.35AD in AY 2012-13. Clause (IV) (C) of Sub-section (8) of section 35AD of the Act stipulates that "building and operative anywhere in India a hotel of twostar or above category as classified by the Central Government". There is no such time limit of obtaining star certificate is prescribed in the above clau....