The Tax Publishers2020 TaxPub(DT) 3486 (Del-Trib) : (2020) 185 ITD 0130

INCOME TAX ACT, 1961

Section 80-ID

Where assessee engaged in business of running hotels, obtained a hotel building under a rent/lease agreement from owners for its business, in view of fact that assessee commenced already established business by way of transfer to a new business of a building previously used as a hotel, assessee was not eligible for deduction under section 80-ID.

Deduction under section 80-ID - Splitting up or reconstruction of a business already in existence - Assessee obtained a hotel building under a rent/lease agreement from orwners for its business -

Assessee was engaged in business of running hotels under a rent/lease agreement. It claimed deduction under section 80-ID in respect of profit derived from said hotel. AO disallowed it by holding that assessee was not eligible for the same. Held: As per section 80-ID(3), deduction is not available to eligible business if it is formed by splitting up or reconstruction of a business already in existence as well as when eligible business is formed by transfer to a new business of a building previously used as a hotel or a convention centre, as case may be. It was found that sellers (B and S) purchased a plot and carried out construction of hotel on it. Subsequently, said hotel building was let out to assessee. Since assessee commenced already established business by way of transfer to a new business of a building previously used as a hotel, assessee was not eligible for deduction under section 80-ID.

Distinguished:CIT v. Prisma Electronics (2014) 51 taxmann.com 77 (All) : 2015 TaxPub(DT) 3821 (All-HC)

REFERRED :

FAVOUR : Against the assessee

A.Y. : 2012-13

IN THE ITAT, DELHI BENCH

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