9911796707
TMI Blog1987 (2) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... nother in respect of the machinery. During these years, the co-owners had invested in the purchase of new plant and machinery as part of expansion program of the rice mill. On the purchase of new plant and machinery, the assessee claimed the following amounts: " 1981-82 1982-83 Rs. Rs. (a) Investment allowance under section 32A 11,551 1,158 5,400 (b) Allowance under section 80HHA as per separate statement 2,340 4,160 (c) Allowance under section 80J as per statement 5,440 5,695 ------ ------ 19,331 16,512" ------ ------ The assessment was completed under section 143(1) allowing the above deductions. The Commissioner of Income-tax noticed that share income was assessed under other sources and that leasin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assets leased. Therefore, the case of the assessee is distinguishable from the other cases relied on by the learned Commissioner of Income-tax. As the co-owners had purchased the asset with the obvious intention of leasing it out from year to year, the element of business is ever present. Business activity has not been defined and the term 'business' is an inclusive term and, therefore, leasing can be looked upon as a business activity if carried out right from the beginning without let or hindrance. he also relied on the decision of the Hyderabad Bench of the Tribunal it ITA No. 354/Hyd. 1984, dated 29-8-1984 and also ITA No. 356/Hyd. 1984, dated 5-2-1986 in similar cases where the Tribunal held in favour of the assessee. 5. Shri N. Santhanam, the learned departmental representative, vehemently argued that the assessee was not carrying on any business and his income was assessed under other sources. Under other sources, only specific deductions are permitted under section 57. The assessee is entitled to deduction in accordance with the provisions of sub-clause (ii) of clause (a) and clause (c) of section 30, section 31 and sub-sections (1), (1A) and (2) of section 32 and sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 56 whether that income would not fall under any of the heads specified in section 14, items A to E, and then only it should be classified under other sources and not before. He further submitted that the assessee had share income from the lessee-firm as a partner. As the ITO had allowed the investment allowance under section 32A and other deductions, he is deemed to have taken the lease income as business income, though such income was returned under other sources. This was in consonance with the mandatory terms of section 56. Even otherwise, he is not precluded from taking the plea that if the true character of the lease income is business income, then the assessee in entitled for the grant of such allowances and deductions. As a matter of fact, the assessee agitated the true nature of the income as business income before the Commissioner of Income-tax in proceedings under section 263. Shri Santhanam objected that this is a new plea raised for the first time before the Tribunal and submitted that such a plea was not raised in the grounds of appeal. He railed on the decision of the Tribunal, Hyderabad Bench 'B', in ITA Nos. 1000/Hyd. 1985 and 291 to 294/Hyd. 1985 in ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down in the case of K. Rami Reddi Sons will not apply to the facts of the case before us. 8. The only point for consideration is whether the assessee is entitled to investment allowance when the assessee himself had admitted the income under other sources. Shri Krishnamurty contends that even though the assessee had inadvertently shown the income under other sources in the return filed by him, the income is only business income and this aspect of the matter was agitated before the Commissioner of Income-tax in the proceedings under section 263. Therefore, this is not is any way a new plea and even if it is a new plea, there is no bar for him to raise this plea before the Tribunal. In this connection he relied on the decision of Supreme Court in CIT v. S. Nelliappan [1967] 66 ITR 722. Shri Santhanam contends was a plea should not be entertained and as the income was assessed under other sources under section 143(1), the character of the income cannot be agitated before the Tribunal indirectly. 9. Having regard to rival submissions, we are inclined to uphold to contention of Shri Krishnamurty. Before the Commissioner of Income-tax, the assessee raised the plea that in the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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