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TMI Blog1982 (10) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... or the asst. yrs.1977-78 were completed u/s 143 r/w s.144(3). The assessee had raised no objection when draft assessments were forwarded to assessee u/s 144B(1). The assessee, therefore, cannot agitate the disallowances in an appeal filed u/s 246 of the IT Act. The orders of the ld. CIT (A) may accordingly be cancelled and those of the ITO restored." 3. It may be stated at once that such an issue was before the Bombay C Special Bench, Bombay, in the case of Sippy Films (1982) 10 Taxaman 6 (Bom-Trib) and the said Bench in 1982 Vol.I, I.T.O., P.1031 (sic) has held against the department. Since the additional ground of appeal has been dealt with by the special bench in the above mentioned case, we follow the order of the Special Bench and hold against the department. 4. Facts are as under : The assessee is a company. It was manufacturing rickshaw maters, taxi metres, etc. The ITO observed in the assessment order for the asst. yr. 1977-78 as follows: "The business of the assessee company was closed down before the beginning of the accountaing period. The loss is claimed only because of management expenses, depreciation and brought forward of losses. Loss or profit has to be com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the establishment is very much there in continuanace and therefore the loss disclosed by the assessee company may be allowed and the ITO be, directed accordingly. 7. The assessee relied on Karsondas Ranchhoddas vs.CIT (1972) 83 ITR 1 (Bom), 72 ITR 11 (Mad), CIT vs.Bharat Nidhi Ltd. (1966) 60 ITR 520 and M/s Sarojini Rajah vs. CIT, Madras (1969) 71 ITR 504 (Mad). 8. The CIT (A) gave careful consideration to what was stated before him and the documents relied on and he came to the conclusion that on the basis of evidence adduced and the arguments advanced the assessee s case was not of discontinuance of business but of temporary suspension of carrying out the normal function as the company was incurring administrative expenses but having no manufacturing activities for the time being. The CIT(A) also relied on the Commentary of Kanga and Palkhiwala, 7th Edition, Vol. II, page 348. Accordingly the contention of the assessee was accepted by the CIT (A) and he directed the ITO to entertain the claim of the assessee and to compute the business loss in each of the three years and to permit the carry forward of the lossess as per the provisions of the Act. All the appeals of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s various details including Director s report and copies of profit and loss account and details of management expenses, the correspondence entered into by the assessee with various parties in the proposal of merger with M/s Bhustan Engineering Works, letter with W.M.D.C. Ltd. for revial of business of the assessee, detaiols of stock with the Union Bank of India, etc. According to Shri Doshi it is wrong to say that the company had stoped its business activity. It was submitted that the agent of the company could not effect the sales of the auto rikshaw and taxi meters. Therefore they were lying unsold. That does not itself means that the business was discontinued. In fact the business of the assessee company was facing hard days and there was a temporary suspension of the business and not entirely discontinuance of business.Once again Shri Doshi took us through various correspondence entered into by the assessee with W.M.D.C. Ltd. to show that the assessee was making every effort for the revival of its business and he also took us through the correspondence entered into for export of the meters manufactured by the assessee. The assessee also made effort to sell meters to Bangala Des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts memorandum and name,. The first loan to the borrower was advanced in September, 1952. The ITO computed the loss for the period 1st January, 1951 to 10th March, 1951 and an income for the period 11th March 1951 to 31st December 1951 and set off the loss of the first period against the income of the second period but refused to set off, the loss the first per lossess of earlier years on the ground that the banking business was terminated on 10th March, 1951 and the income for the period 11th March, 1951 to 31st December, 1951 was income from other sources.The assess had dropped its banking business but it maintained it capital with its assets retained its staff and continued to incur legal expenses inconnection with its business and to pay fees of its direct for their work done in connection with the management of the company. The Tribunal held that the company continued to carry on the business of money lending financing and purchanse and sale of securitites and allowed the set off of earlier losses. On reference it was held that the fact that the assessee advanced its first loan only in September, 1952 did not indicate that tis business cesased to exist or that the assessee did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty of the company. They instituted a suit against Rajaram Gupta for eviction. A compromise was arrived at in that suit and in terms of the compromise a decree was passed by the Court. Under the decree, Rajaram Gupta was allowed to remain in possession of the factory upto 30th June, 1968, on conditions embodied in the decree. The factory was, however, sold by the debenture trustees on 19th Dec, 1967 to Shri Subodh, Shri Suryakant and Shri Shrikant Gupta who executed a deed of partnership on 29th Dec 1967 and the partnership came into force in accordance with the terms of the deed w.e.f. 19th Dec, 1967, i.e., the date when the factory was purchased by the firm on 22nd May, 1968. This firm granted a lease of the factory to M/s Rajaram Brothers for a period of 5 years w.e.f. 19th December, 1967. For asst.yr. 1969-70 the assessee filed an application before the ITO for registration. The ITO was of the view that as the assessee did not carry on any business during the relevant previous year, the assessee was not entitled to registration. The AAC, however, allowed the assessee s appeal. The department went in appeal before the Tribunal which held that as no business was carried on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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