Section 35ad (hotel industry)

There are two conditions to be fulfilled for claiming Section 35AD deduction as follows:

1) Specified business is not set up by splitting up, or the reconstruction of a business already in existence.

2) It is not set up by the transfer to the specified business of machinery or plant previously used for any purpose (i.e. new plant & machinery is to be used)

So keeping in mind first condition, in my view your friend cannot claim section 35AD deduction.

Yes as rightly said by mahesh 1st condition under section 35AD is not fulfilled therfore no benefit is availiable in ur frnds case.