TaxTMI 
TaxTMI 
2025 (3) TMI 1567
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....ed by the Tribunal that the construction of the Hotel Rani Mahal was prior to April 2008 and the earlier hotel Rani Mahal was functioning till 04th October, 2008 are without any basis and there is no material on record to support these findings, therefore, these findings are perverse and liable to be set aside? (ii) Whether on the facts and in circumstances of the case and in law Tribunal has erred in holding that hotel SIRIS 18 Agra, is 'formed' by the lease agreement between the assessee and Bharti Sehgal and such finding of law is contrary to the interpretation of similar legislation rendered by jurisdictional High Court in the case of Commissioner of Income-Tax vs. Heartland Delhi Transcription Services P. Ltd.; (2014) 366 ITR 523 (Del) in respect of Section 10B of the Act as the formation eligible business would relate back to formation of eligible business by the previous owner?" 3. From the facts on which there does not appear to be any dispute, we gather that the assessee was engaged in the business of running hotels under the name and style of SIRIS 18. During the AY under consideration, the assessee was stated to be running two hotels, of which o....
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....d hotel building was let out to Sh Ramesh Bhatia during FY 2008-09 relevant to Assessment Year 2009-10 vide lease/rent agreement dated 01.10.2008 by Sh Bharti Sehgal for running the Hotel Rani Mahal for lease period of 11 months. (viii) Subsequently, the said hotel Rani Mahal, was sold vide purchase deed executed on 08/06/2009 for a total consideration, of Rs 1,00,00,000/- inclusive of the value of furniture and fixtures on as is where is basis attached to the building by the seller Sh Bharti Sehgal and Sh Sunil Kumar, to Sh Ramesh Bhatia, karta of HUF and his wife Ms Veebha Bhatia. (ix) There was already an existing hotel under the name and style of Hotel Rani Mahal at the building C-2/3, Taj Nagri Phase II, Fatehabad Road, Agra, run by Sh Bharti Sehgal and during FY 2007-08 and part of FY 2008-09. (x) The operations of business of running hotel was continued by the assessee from August, 2008 i.e. FY 2008-09 relevant to Assessment Year 2009-10. (xi) The necessary approval from the Ministry of Tourism under the category of Two star hotel was received by the assessee on 26th August, 2010 In the new name SIRIS 18 Agra (xii) The assessee fi....
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....iday to new hotels of two, three and four star categories and convention centres. 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 80 ID extended specified districts having World Heritage Site, Including Agra, UP, to new hotels of two, three and four star categories from Assessment Year 2009-10. The assessee, has initially violated the provisions of Act by claiming deduction u/s 80 ID for A Vs 2009-10 and A Y 2010-11 without obtaining 2 star categorization. In fact the major thrust of the Section that the tax benefits shall be available only to new hotels have been wrongly Interpreted and assessee started wrongly claiming deduction u/s 80 ID In respect of hotel formed by splitting, reconstruction, transfer of an old hotel by renaming Into a new hotel. Therefore, all clauses of Section 80 ID have been violated and Inaccurate particulars of Income have been filed and true Income has been concealed. 10.3 The reply of the assessee insisted the theory that the new hotel is not formed by splitting or reconstitution of old hotel but is an altogether it is a new hotel. However, the Restriction o....
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....inistry of Tourism should take up with Ministry of Finance (the tax holiday is a scheme of the Ministry of Finance) to extend the scheme to cover upgradation of existing hotels/renovations/expansions as well. Therefore, the intent of Legislature that the deduction u/s 80 ID of the Act is allowed only to hotel that was newly constructed and that started functioning and was classified between April 1, 2008 and March 31, 2013 in the World Heritage Sites, The objective of financial Incentive has also been spelt out in the study paper that Incentive scheme of the Ministry specifically targeted to increase Investments in star-category hotels in select locations in the country. The Study report, available in public domain, also specifies that most of the hotels that have been able to avail the incentive have not faced any problem which is indicative of the fact that the process of availing the incentive is not all that tedious and it was admitted by the assesses who are availing the benefit of incentive that they have not faced any procedural problem in availing the incentive. 10.7 The whole Hotel Industry, as per the study paper, is aware that the Financial Incentive (deduction ....
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....ts functioning is not fulfilled by the assessee. Therefore, in contravening the above said provisions of the Act, no deduction shall be available irrespective of the year of commencement of Hotel, as the real facts has been suppressed by various forms and eligibility conditions." 6. Aggrieved by the aforesaid order, the appellant approached the CIT(A). After noticing the facts which had led to the framing of the order of assessment, the CIT(A) dismissed the appeal holding as follows:- "I have considered the submissions of the appellant as well as the findings of the Ld. AO and judicial pronouncements of higher authorities and the Hon'ble Courts relied upon by the Ld. AO & Ld. AR. In view of the above discussion I am of the considered opinion that the vital factors in determining the fulfilment 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 shou....
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....ut from the material existing on the record by the AO, found itself unconvinced to interfere with the order as framed in assessment proceedings. It has, in this respect, noted that Mr. Bharti Sehgal and Mr. Sunil Kumar had purchased the plot in question situate in Agra on 21 March 2007 and had thereafter commenced construction of a hotel in the name and style of Hotel Rani Mahal during Financial Year (FY) 2007-08. It was this hotel building which was thereafter let out to the assessee in AY 2009-10 in terms of a lease/rent agreement dated 01 October 2008. The lease agreement stipulated the term to be 11 months only. 9. Mr. Bharti Sehgal, thereafter, is stated to have surrendered its Registration Certificate held under the Uttar Pradesh Value Added Tax Act, 2008 (2008 Act). It was alleged that the business of Hotel Rani Mahal came to be closed on 05 October 2008. However, the Tribunal has found from the material and evidence on the record that in Form No. 10CCBBA, the property in respect of which disclosures were made was shown in the name of Hotel SIRIS 18. It thus came to conclude that although the construction of Hotel Rani Mahal may have commenced prior to April 2008, it was ....