Hoteliers seek clarity on investment linked tax deduction announced in Union Budget 2010-11

The hoteliers association, while welcoming the budget proposal of granting investment-linked incentive to new hotel projects under Section 35 (AD) of the Income Tax Act, has urged the government to clear confusion in relation to the specific clauses in the Section.

Speaking at a seminar hosted by Foundation for Aviation & Sustainable Tourism (FAST) in Delhi last month, Vivek Nair, Vice Chairman and Managing Director, Leela Group and Secretary of Federation of Hotel & Restaurant Associations of India (FHRAI) said, “The clause stating that ‘hotels should be constructed and managed by the assessee’ in the Section would be an impediment as hotels today are constructed by real estate owners and managed by management companies.” He also urged the government to remove April 1, 2010 as the cut off date, as setting up hotels is time-consuming and takes more than one year for execution.