H.N. Seth, J.
1. At the instance of the assessee, M/s. U. P. Hotel & Restaurants Ltd., Varanasi, the Income-tax Appellate Tribunal, Allahabad, has, for the assessment year 1972-73, the previous year for which ended on 30th September, 1971, stated the case and referred the following two questions for the opinion of this court :
'1. Whether, on the facts and in the circumstances of the case, the assessee was entitled to relief under Section 80J of the Income-tax Act, 1961, in respect of the new wing added in the hotel ?
2. Whether, on the facts and in the circumstances of the case, an appeal is maintainable against an order directing the levy of interest under Section 215 of the Act '
2. Briefly stated, the facts giving rise to the first question are that the assessee is a limited company which derives income from a five star hotel known as Hotel Clarks Shiraj at Agra. The assessee commenced the aforesaid hotel business at Agra some time after the year 1961. During the years 1969 and 1970 it added a new wing to the Hotel Clarks Shiraj employing a capital of Rs. 16,35,088. In the relevant assessment year, the assessee claimed benefit under Section 80J in respect of the capital employed by it in the new wing. The ITO disallowed the relief under Section 80J claimed by the assessee on the ground that the business in respect of the new wing had not been recognised by 'the Central Govt. In appeal, the AAC observed that as the population of Agra exceeded five lakhs, the benefit of Section 80J could be given to the assessee only if the new wing added by it to Hotel Clarks Shiraj had fifty separate guest rooms with attached bathrooms equipped with sanitary fittings, etc. Since the wing had only forty rooms, the assessee was not entitled to any relief in respect thereof under Section 80J of the Act.
3. The assessee then went up in appeal before the Income-tax Appellate Tribunal, Allahabad, which following its own decision for the earlier years, affirmed the disallowance of the relief claimed by the assessee.
4. Relevant portion of Section 80J, as it stood at the material, time ran thus :
' 80J. Deduction in respect of profits and gains from newly established industrial undertakings or ships or hotel business in certain cases.--(1) Where the gross total income of an assessee includes any profits and grains derived from...... business of a hotel, to which this section applies, there shall, inaccordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains......
(6) This section applies to the business of any hotel, where all the following conditions are fulfilled, namely :--
(a) the business of the hotel starts functioning on or after the 1st day of April, 1961, and is not formed by the splitting up or the reconstruction, of a business already in existence or by the transfer to a new business of a building previously used as a hotel or of any machinery or plant previously used for any purpose ;
(b) the business of the hotel is owned and carried on by a company registered in India with a paid-up capital of not less than five hundred thousand rupees;
(c) the hotel has such number and types of guest rooms and provides such amenities as may be prescribed, having regard to the population and the tourist importance of the place in which the hotel is located ; and
(d) the hotel is for the time being approved for the purposes of this sub-section by the Central Government...... '
Rule 18 of the Income-tax Rules laid down that for the purpose of Clause (c) of Sub-section (6) of Section 80J, a hotel should have--
(a) not less then fifty guest rooms, with attached bathrooms, equipped with modern sanitary fittings if it is situated in a town with a population of five lakhs or more ; or
(b) not less than twenty-five guest rooms, with attached bathrooms, equipped with modern sanitary fittings, if it is situated in a town with a population of less than five lakhs.'
5. It will thus be seen that the assessee can claim the benefit under Section 80J only if all the conditions mentioned in Clauses (a) to (d) of Sub-section (6) exist. The arguments at the bar have been confined to the question regarding the existence of the conditions mentioned in Clause (c) of Sub-section (6) only and for the purpose of answering the questions referred to us we shall assume that conditions (a), (b) and (d) exist in this case.
6. Keeping in view the provisions contained in Rule 18 and the fact that the hotel business in relation to which the benefit under Section 80J is being claimed is located in the city of Agra which has a population of over 5 lakhs, the condition mentioned in Clause (c) would be fulfilled only if it is shown that the concerned hotel has not less than fifty guest rooms with bathrooms equipped with modern sanitary fittings.
7. The assessee contends that in the instant case even though the finding is that the new wing added by it consisted of only forty rooms, there were about one hundred rooms more in the Hotel Clarks Shiraj and, as such, the addition of forty rooms meant that the assessee's hotel now has as many as one hundred and forty rooms. The assessee is, therefore, entitled to the relief claimed under Section 80J.
8. We are unable to accept this submission. The benefit under Section 80J is available in respect of a business of the nature specified in the section which is commenced after April, 1961. The assessee is separately entitled to the benefit under this section in respect of each and every such business which it commences after April, 1961. If the period during which the benefit under Section 80J is available for a hotel business is over and the assessee merely expands that business thereafter, and which expansion does not result in the commencement of a new business, the assessee would not be entitled to any benefit under Section 80J in respect of capital employed in the said expansion. However, if the expansion results in the commencement of a business of the type mentioned in Section 80J, the assessee would undoubtedly be entitled to claim the benefit in respect of the capital employed in such new business even though the said business may be similar to that which was already being carried on by it and for which the period of the holiday provided by the section has expired. If the assessee claims benefit under Section 80J in respect of such new business it will have to satisfy all the conditions mentioned in Sub-section (6) of Section 80J in relation to this new business independently of the old business which was being carried on by it. Since the assessee claims benefit under Section 80J in respect of the new wing, it has to satisfy the conditions of Clauses (a) to (d) of Sub-section (6) of Section 80J in respect of this new wing independently of the business which was carried on by it in the remaining portion of Hotel Clarks Shiraj. It is not disputed that if this view is taken the assessee's case will not be covered by Rule 18 which provides that in a city like Agra population whereof is more than five lakhs the hotel (new wing) should have at least fifty bed rooms with attached bathrooms and other amenities specified therein. As this condition is not satisfied in respect of the new wing constructed by the assessee, it is not entitled to claim benefit under Section 80J for the capital employed by it in respect of that wing. The first question, therefore, has to be answered in the negative and in favour of the revenue.
9. So far as the second question is concerned, it has been held by a Full Bench of this court in the case of CIT v. Geeta Ram Kali Ram : 121ITR708(All) that no appeal lies against an order directing levy of penal interest under Section 215 of the I.T. Act. The second question is accordingly answered in the negative and in favour of the revenue.
10. In the result both the questions referred to us are answered in the negative and in favour of the revenue. The Commissioner shall be entitled to costs which arc assessed at Rs. 250.