1992 (4) TMI 13 - HC - Income Tax

Summary

Issues Involved:
1. Disallowance of carry forward of loss and running expenses.
2. Tribunal's findings on the intention and ability of the assessee to restart the business.

Summary:

Issue 1: Disallowance of Carry Forward of Loss and Running Expenses
The Tribunal confirmed the disallowance of carry forward of loss and running expenses to the assessee for the assessment year 1982-83. The assessee had leased out its factory and the lease expired in 1981. The Income-tax Officer assessed the income from fixed deposits as income from "Other sources" and took the business income as "Nil," thereby disallowing the carry forward of loss and running expenses. The Commissioner of Income-tax upheld this decision, and the Tribunal affirmed it, stating that the assessee did not have any business and was not in possession of the mill.

Issue 2: Tribunal's Findings on Intention and Ability to Restart Business
The Tribunal's findings that the assessee had no intention to restart the business and was not in a position to carry on business were challenged as perverse and contrary to the materials on record. The High Court noted that the assessee had taken steps for the eviction of the lessee and had incurred expenses for holding board meetings and paying directors' fees, indicating an intention to restart the business. The Court found the Tribunal's inference that the assessee had no intention to restart the business to be based on no evidence and contrary to the facts. The Court held that the Tribunal's conclusion was perverse and answered the second question in favor of the assessee, thereby negating the first question and directing the Tribunal to examine if any part of the running business expenses are disallowable otherwise.

Conclusion:
The High Court concluded that the Tribunal's findings were not supported by evidence and were contrary to the facts. The Court ruled in favor of the assessee, allowing the carry forward of loss and running expenses, and directed the Tribunal to re-examine the disallowance of any part of the running business expenses.