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Section 35ad (hotel industry)

08 January 2013

Hello Sir and Friends

My Friend is intended to purchase an existing hotel. Now he wants to know is there any benifit available under section 35AD ? if yes, then please give full details regarding such benifit under section 35AD. Please be spedific on your answer keeping in mind that the hotel he purchase is an existing hotel (3 Star Category). I have read this section but I cannot conclude any specific answer.

THANKS IN ADVANCE

Regards

AMIT KUMAR PANDEY

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2 Replies

MAHESH GARG (AUDIT EXECUTIVE) (334 Points)
Replied 08 January 2013

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.