Assessee engaged in business of running hotels and resorts. It claimed deduction under section 35AD on ground that it had incurred expenditure towards construction of new Five Star Hotel. The Assessing Officer disallowed the expenditure on the ground that the assessee did not build hotel building and had been operating same on leasehold land and building and intention of section 35AD is to promote fresh investment but not to accommodate old investments and give tax benefits. CIT (A) confirmed the   disallowances. On appeal the Tribunal held that section 35AD do not specify that assessee has to construct entire building by itself or own building and land.  Provisions only specify that specified business should be in nature of building and operating a new hotel of 2 star or above category as classified by Central Government.  From lease deed produced by assessee it was apparent that assessee was also required to spend considerable amount for constructing a portion of building such as interior civil works, plumbing works, electrical works and other civil work relating to erecting equipments, elevators, firefighting equipment, etc. Therefore, it could not be said that assessee had not participated in constructing building, though basic civil structure was constructed by lessor. Therefore, where entire investment made by assessee was for constructing a portion of building and for operating a new hotel of category specified under Act, assessee would be entitled for benefit of deduction under section 35AD and accordingly, Assessing Officer was to be directed to grant deduction to assessee under provisions of section 35AD of the Act.  (AY. 2012-13)