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TMI Blog1975 (11) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... account in respect of contract of aRajathanCanaltaken in 1957 and completed in 1959. The final bill for the said contract was prepared by the Rajasthan Government in 1962. There were, however, certain disputes as according to the firm it was not paid for certain items executed by it and for the material supplied. The firm filed four suit being Suit Nos. 13,14,15 and 16 of 1963 in the Court of the District Judge,Kota. The District Judge decreed those suits on27th Feb., 1969for the recovery of Rs. 1,31,316 in all. The Government of Rajasthan filed appeals against the judgments and decrees of the District Judge before the High Court. Under the orders of the High Court the decretal amount of Rs. 1,31,316 was deposited by the Government of Rajas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that if the business had really been discontinued it should have been well within the assessee s knowledge while filing the appeal. Even on merits of the ground the AAC rejected the assessee s contention. He observed that the agreement dt.26th April, 1963filed by the assessee in support of his contention of discontinuance of business was in the nature of Power of Attorney in favour of one of the partners to do all lawful acts for and on behalf of the firm. He also observed that the said agreement was not produced before the ITO or before him at any earlier stage. The AAC then found on facts that the assessee had itself shown contracts receipts in its return of income for the asst. yrs. 1963-64 to 1966-67 and therefore, the same were at v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irm was discontinued in 1963 the payments received by the assessee in connection with the contract work done in pursuance of the contracts of 1957 could not be taxed under s. 28(i) in the year under appeal when no business was carried on. In the alternative his submission was that if the Tribunal disagreed with his first contention then the receipt in question could be treated like any other contract receipts and a rate applied thereon. In support of the first contention, learned counsel submitted that in accordance with the agreement dt.26th March, 1963no business was carried on by the assessee firm from 1963 onwards. He pointed out that in order that a receipt may be taxable under s. 28(i) of the Act, it was necessary that the business wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the light of the day for the first time in the appeal before the AAC and since it was not produced before the ITO, it should not be relied on. It was further submitted that the business of the assessee firm at best remained dormant during the year under appeal. It was also stressed that the assessee was required to give a notice of discontinuance of business under s. 176(3) to the ITO and since no such notice was given the business could not be taken to have been discontinued. Reliance was placed on the commentaries on ITA, 1961 by Sampat Iyengar VI Edition pages 722, 1720 and 1816 and the decision of the Supreme Court in CIT vs. A Gajapathy Naidu 53 ITR 114 (SC). In regard to the alternative submission made by the assessee it is submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. retains its registered office and holds meetings etc. It is not necessary that a business to be in existence should have work all the time. There may be long intervals of inactivity and a concern may still be a going concern though it may, for some time, be quite and dormant. The mere fact that a businessman has not been able to obtain a contract and the business has for some time been, in that sense, dormant would not mean that it has ceased to exist if the assessee continues to maintain an establishment and incur expenses in the expectation that work would come and the business will be successful". It was evidently for the assessee to prove that the business was discontinued. The only evidence tendered in support of this contention i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts and the circumstances of the case referred to above, in our opinion, clearly show that there was no intention on the part of the assessee to discontinue this business and hence the assessee s contention that the business was discontinued must be rejected. The authorities relied on for the assessee are distinguishable on facts and as it is a question of fact in each case whether a business was discontinued, it is not necessary to discuss the authorities and distinguish the same. 7. This leaves us with the assessee s alternative contention to the effect that the amount in question be treated as a contract receipt and the net profit determined by applying a rate to the actual contract receipts. The amount of Rs. 1,31,316 received by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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