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TMI Blog2007 (6) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has also stated that similar activity was carried on by the assessee in the previous year relevant to the assessment year 1996-97. During the previous year period relevant to the assessment years 1997-98 and 1998-99, the assessee could not carry on any business because of hostile market conditions prevailed in the real estate business. The assessee further explained that the business was resumed by the assessee-company during the impugned previous year and, therefore, there was no question of not doing any business as apprehended by the Assessing Officer. The contention of the ld senior DR is that the purchase and sale of shops stated to be made during the impugned previous year was only a make-belief arrangement. But we find to state that there is no material on record to support such an observation. On the other hand, the details were furnished before the CIT(A) and on that ground, the CIT(A) has come to a conclusion that the assessee has carried on business during the relevant previous year. Therefore, it is to be stated that the CIT(A) has considered both the objections raised by the Assessing Officer against the claim of the assessee on the question of carry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in directing the Assessing Officer to allow carry forward of loss of Rs. 15,62,706 with the observation that the assessee had disclosed income from sale of shops and miscellaneous income, without appreciating the fact that neither of this was assessable under the head Profits and gains of business or profession as clearly held by the Assessing Officer in para 3 of the assessment order which finding was not questioned by the CIT(A). 2. The ld. CIT(A) failed to appreciate that the assessee had not carried on any business right from the assessment year 1998-99 and therefore there was no question of the net result of the computation under the head Profits and gains of business or profession being a loss in terms of section 72 of the Act. 3. The ld. CIT(A) failed to appreciate that the shops sold by the assessee were never declared as its stock-in-trade not even as opening stock in the balance sheet of this year, nor was trading in shops ever the assessee's line of business and therefore the loss declared from this activity could not be allowed to be carried forward under section 72 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned above. 6. The learned senior departmental representative further contended that in these circumstances the huge amount of Rs. 28,80,046 claimed by the assessee by way of administrative expenses could not be considered as expenses incurred for business. Likewise, the assessee has claimed interest expenses of Rs. 10,40,921 whereas in fact the assessee has not carried on any business and there was no need of deployment of interest bearing funds. The learned senior departmental representative further pointed out that even in the administrative expenses, the main component is bad debts amounting to Rs. 26,46,168. 7. The learned senior departmental representative, therefore, submitted that even though the Assessing Officer has not explained his second observation regarding non-carrying of business in a very detailed manner in his assessment order, the crucial fact has been brought on record and the CIT(A) has erred in passing his order without giving due importance to the said observation of the assessing authority. 8. The learned senior departmental representative relied on the Supreme Court decision in the case of McDowell Co. Ltd. v. CTO [1985] l54 ITR 148 to press hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven though the Assessing Officer has made such an observation that the assessee has not carried on any business during the previous year relevant to the assessment year under appeal, it is very pertinent to note that the Assessing Officer himself has determined the loss for the impugned assessment year at Rs. 25,83,603. De hors the observation made by the assessing authority in the assessment order, once the Assessing Officer determined the loss for a particular year, it is the statutory right of the assessee to claim carry forward of the said loss under the provisions of section 72 of Income-tax Act, 1961. 12. The learned counsel further explained that it is not correct to say that the assessee had not carried on any business during the previous year relevant to the assessment year under appeal and also during the year preceding the said previous year. It was not a case of non-carrying on of business or stoppage of business. It was a case of lull period. The assessee was carrying on business in the past and was carrying on business in the subsequent assessment year also. But during the interregnum period the market was so adverse that the assessee did not venture into dealing i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis of the facts placed before it even though the orders of the lower authorities might not have dealt with those facts in a comprehensive manner. But the above principle has to be applied in such appropriate cases. The issue in the present case before us is whether the assessee was carrying on any business during the relevant previous year or not. The assessee has purchased and sold shops during the previous year. Purchase and sale of shops is one of the business empowered by the object clauses of the assessee-company. During the earlier two previous years, the assessee has not carried on any business. But that inactivity should not be viewed in isolation. The assessee had carried on business previously and subsequently. Only during the interregnum period of two years that the assessee was not in fact concluding any transactions as such. But that does not mean the cessation of business as held by the Bombay High Court in the case of Karsondas Ranchhoddass (supra). This aspect of the case should be clear if we go through the detailed letter written by the assessee-company to the CIT(A) on October 9, 2003. In fact the CIT(A) has asked a pertinent question to the assessee that wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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