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TMI Blog2018 (4) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... he circumstances of the case and law, the ld. CIT(A) erred in deleting the addition of Rs. 15,23,58,239/- made on account of disallowance of expenditure for not carrying out any business activity during the year?" 2. At the outset, ld. counsel for the assessee, Mr. R.S. Singhvi, submitted that precise issue had come up for consideration before this Tribunal in assessee's own case for the Assessment Year 2007-08, wherein the matter has been decided in favour of the assessee. 3. Learned DR though accepted that the issues involved are covered by the decision of the Tribunal for the earlier year; however he strongly relied upon the order of the Assessing Officer. 4. The relevant facts are that the Assessing Officer during the course of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had started. Due to this fact there was a temporarily suspension and closure of the hotel business for carrying out such extensive renovation. After demolition of the old structure, the building work was given to a contractor on 1st July, 2005, who as per the agreement was to complete within eighteen months i.e. by December, 2006. But after completion also some repairs and small changes had to be carried out and these repair got completed by June, 2007 and completion certificate was applied to MCD in July, 2007 which was received in January, 2009. Thereafter the commercial operation of the hotel was resumed in full-fledged manner in April, 2009. However, Assessing Officer disallowed the expenses after following observations:- "a. The sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e after observing and holding as under: "I have perused the assessment order, grounds of appeals, written submissions and discussed the matter with the AR of the appellant company. It is noticed that the appellant company acquired the Lodhi Hotel from India Tourism Development Corporation in February 22, 2002 on a going concern basis. The hotel building of Lodhi hotel was old and dilapidated, therefore, the appellant Company was not able to run the business profitably. Therefore, it decided to renovate and redevelop the hotel property and therefore the hotel operations of the Lodhi Hotel were temporarily suspended. The hotel building was reconstructed and renovated and the construction has been completed in the year under appeal. The appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... five star luxury hotel and has around 70 rooms. To manage and operate this world class hotel, trained employees with professional background are required. I have gone through the order of the ITAT and Hon'ble High Court of Delhi filed by the appellant. It is seen that the appellant has run the hotel for sometime after taking this property from ITDC but later on it was suspended and restarted during the year under appeal. The Assessing Officer has followed various judgments. Applying the same ratio decided in these cases, it has been held that only when the hotel property is ready to receive clients then only it would amount to commencement of business. As per the details filed by the appellant, it is seen that the aforementioned detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l business. The assessee is accounting the period of suspension by stating that the contract for the building work was given to the contractor on 1.7.2005, construction was completed during the FY 2006-07, small changes took place till June 2007, hotel property was operational in June 2007, application for completion certificate was made in July2007, completion certificate was issued in January 2009 and ultimately commercial operations of the hotel resumed in April 2009. Further, Learned CIT(A) also, vide para 5.2 of his order, clearly held that there is no dispute over the fact that the hotel activity was temporarily in suspension. It, therefore, makes the things amply clear that the intention of the assessee was to temporarily suspend the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s Kalyanji Mavji (supra) we further hold that the assessee's claim of expenditure incurred during the period of temporary suspension of business has to be allowed. However, the quantum of expenditure needs to be verified at the end of the AO. For this purpose of verification of the quantum, we set aside the issue to the file of the AO with a direction that after verification and if the claim is found to be genuine, the AO will allow the same. Consequently we find that the order of the Ld. CIT(A) on this aspect cannot be sustained. Revenue grounds are dismissed and the assessee's grounds are allowed." 8. Thus respectfully following the earlier order precedence, which is applicable mutatis mutandis for this year also, we uphold the deletion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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