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Issues:
1. Whether the finding of the Tribunal that the assessee company was carrying on business in the accounting year 1948-49 was justified? 2. Interpretation of the relevant proviso to section 10(2)(vii) regarding the sale of the undertaking. Analysis: Issue 1: The Tribunal submitted a supplementary statement of the case to determine if the finding that the assessee company was carrying on business in 1948-49 was justified. The Tribunal considered various circumstances to support its conclusion. Firstly, the terms of the lease indicated that the company was operating the business through the hirer, as the rent was based on the factory's actual working. Additionally, the company claimed business losses and expenses under section 10, indicating business activities. The assessee also claimed depreciation and carried forward losses from the previous year, which could only be done if the business was operational. The Court emphasized that the focus was on whether there was sufficient evidence to support the Tribunal's finding, not reassessing the evidence itself. Issue 2: The second point raised was the interpretation of the proviso to section 10(2)(vii) concerning the sale of the undertaking. The contention was that if the entire undertaking is sold, the proviso does not apply. However, the Court rejected this argument, stating that the proviso applies regardless of whether the building, machinery, or plant is sold separately or as part of the entire undertaking. The legislative intent behind the proviso was to ensure that if the sale price exceeded the written down value, the company should make up for the depreciation claimed. The Court found no reason to limit this principle to partial sales only. In conclusion, the Court answered both the main and supplementary questions in the affirmative, affirming that the assessee company was carrying on business in the relevant accounting year. The assessee was directed to pay the costs associated with the case.
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