TaxTMI 
TaxTMI 
2020 (8) TMI 757
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....he provisions of the aforesaid section. 3. Under the facts and circumstances of the case, the ld. First Appellate Authority has grossly erred in concluding that the assessee has failed to fulfill all the conditions laid down under sub section (3) of section 80ID of the Act, which is grossly injudicious, unwarranted, against the facts of the case and untenable at law." 3. The assessee is engaged in the business of running of Hotels under the name & style of SIRIS 18. During the year under consideration, the assessee has run two Hotels under the name SIRIS 18 Gurgaon and SIRIS 18 Agra. The assessee filed its return of income for the year under consideration on 30.09.2012 declaring total income of Rs. 5,82,810/- after claiming deduction u/s 80ID of the Act amounting to Rs. 56,03,969/- in respect of profit derived from Hotel SIRIS 18 Agra. The case of the assessee was selected for scrutiny and the Assessing Officer vide his order dated 16.03.2015 passed u/s 143(3) of the Act, disallowed the claim of deduction u/s 80ID of the Act amounting to Rs. 56,03,969/- 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the a....
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....ident from the copy of assessment order dated 18.05.2012 passed u/s 28 of the UP VAT Act, 2008 in the case of Hotel Rani Mahal. The Ld. AR further submitted that without prejudice to the aforesaid submission the assessee would also like to clarify that once the property/hotel has come into existence between 01/04/2008 & 31/03/2013 and the income is derived therefrom by operating the said hotel then the exemption is available to the assessee. The Ld. AR further submitted that even if the person, say 'X' who is operating and deriving the income therefrom changes by transferring the said property or operations to someone else person, say 'Y' then even in such a situation the exemption u/s 80ID will be available to the new assessee 'Y' in this case. The exemption in Section 80ID is property or the business specific and not the assessee specific. The Section gives exemption to the eligible business and not to an eligible assessee. The restriction contained in clause (i),(ii) & (iii)of Section 80ID(3) is to prohibit properties & businesses existing prior to 1/4/2008 claiming exemption by transferring the same. The Ld. AR further submits that Section 80ID provides for exemption from taxab....
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....and true income has been concealed. As per the Section 80ID, the emphasis is on formation of new hotel and not on use of existing hotel. Therefore, it is not transfer of building or material or new ownership, but the one which can be held to have resulted in formation of the undertaking, than there is not an existence of new hotel. In this case, even the assessee has run the hotel on rent during FY 2008-09 (vide lease/rent deed dated 01.01.2008) before formation of New Hotel further strengthens it. The part played by the assessee by taking the building on lease during F.Y. 2008- 09 was dominant in formation of the new hotel during F.Y. 2010-11 at the very same place further strengthens the fact that existing hotel was split, reconstructed and renamed for availing benefit u/s 80ID of the Act. It is proceeded on basis that once lease amounted to transfer, the assessee became ineligible from claiming any exemption for constructing new hotel at the very same premises. The Act of conversion of lease hold hotel under the name and style of Hotel Rani Mahal, into new name SIRIS 18 Agra is clearly a case where a new undertaking is established in premises taken on lease then it, always, amou....
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....The period of construction of hotel described by the Assessee is F.Y. 2007-08 to 2008-09. The UPVAT registration done by Bharti Sehgal, Developer of the property was on 19.08.2008. Rent agreement between Bharti Sehgal and Ramesh Bhatia (HUF) i.e. the assessee herein was entered on 06.10.2008. The business was started on October, 2008. Approval from pollution control board was obtained on 02.12.2008. Approval from fire department was obtained on 08.11.2008. Deed for purchase of Hotel Building by Ramesh Bhatia was entered into on 08.06.2009. Categorised as 2 star hotel by Ministry of Tourism on 20.08.2010. The initial assessment year is 2011-12. Firstly, we must looked into Section 80ID which is extracted as follows: "Deduction in respect of profits and gains from business of hotels and convention centres in specified area. 80ID. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking from any business referred to in subsection (2) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total inc....
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...."convention centre" means a building of a prescribed area comprising of convention halls to be used for the purpose of holding conferences and seminars, being of such size and number and having such other facilities and amenities, as may be prescribed; (b) "hotel" means a hotel of two-star, three-star or four-star category as classified by the Central Government; (c) "initial assessment year"- (i) in the case of a hotel, means the assessment year relevant to the previous year in which the business of the hotel starts functioning; (ii) in the case of a convention centre, means the assessment year relevant to the previous year in which the convention centre starts operating on a commercial basis; (d) "specified area" means the National Capital Territory of Delhi and the districts of Faridabad, Gurgaon, Gautam Budh Nagar and Ghaziabad; (e) "specified district having a World Heritage Site" means districts, specified in column (2) of the Table below, of the States, specified in the corresponding entry in column (3) of the said Table: ............... ." It is pertinent to note here that as per sub-section (3) of 80ID, the ....