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TMI Blog2009 (11) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore learned CIT(A) was justified in holding that such lease income had to be assessed under income from house property. Carry forward business losses - set off against lease rentals assessed under the head 'Income from house property – cl. (i) of sub-s. (1) of s. 72 clearly stipulates that carry forward loss of business shall be set off only against profits and gains of any business or profession carried on by an assessee. - Clearly assessee was not carrying on any business during the relevant previous year. Therefore its claim that carry forward business losses ought to have been considered for set off against lease rentals cannot be accepted. - - - - - Dated:- 6-11-2009 - Member(s) : HARI OM MARATHA., ABRAHAM P. GEORGE. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had admitted lease income under the head 'Income from business'. When required to explain why such income should not be assessed under the head 'Income from other sources', its reply was as under: "The premises were used by us all along for the purpose of our business. We were of the view that the asset can be exploited in a more profitable manner by leasing out a portion of it i.e., a portion of land and superstructure as permitted by cl. 30 of the objects clause of memorandum of association, retaining the remaining land for our other business purposes. With this end in view we entered into a lease agreement effective 1st April, 2003 with Express Publications (Madurai Ltd.). You will see from the lease agreement that the premises in ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the head 'Business', should be assessed under the head 'House property'. Learned CIT(A) however was of the opinion that lease of property was not on account of any business activity. Since the assessee had ceased its manufacturing activity and sold the machinery, according to him, it was futile for the assessee to claim that it continued to carry on any business. However learned CIT(A) was agreeable to assessee's ground that such lease income had to be assessed under the head 'House property', for according to him, the decision of Central Stusdios (P) Ltd. relied on by the AO clearly held that such income had to be considered under the head 'Income from house property'. Nevertheless, learned CIT(A) did not agree with the assessee's demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... susceptible and eligible for set off against carried forward losses. Reliance was placed on the decision of Hon'ble jurisdictional High Court in the case of CIT vs. Ramnath Goenka cited. 7. We have perused the orders and heard the rival contentions. First dealing with the grievance of the Revenue that the lease rentals ought to have been considered under the head 'Income from other sources' and not under 'Income from house property', we are of the opinion that this line of contention cannot be accepted in view of the decision of the Hon'ble apex Court in various cases starting from East India Housing Land Development Trust Ltd. vs. CIT (1961) 42 ITR 49 (SC) and ending with Shambhu Investment (P) Ltd. vs. CIT (2003) 184 CTR (SC) 91 : (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from against dividends received by the assessee on shares which were part of its trading assets. Taking cue from this decision, their Lordships held that the amount of dividend would form a part of income from the business of the assessee, if the shares were a part of the assessee's trading asset and the assessee would be entitled to set off as claimed, against losses from its business incurred during the preceding years. Central to this decision was that fact that dividends were carried on shares held by the assessee as 'stock-in-trade'. Here on the other hand, there is no case for the assessee that land and building was a part of its stock-in-trade or trading asset. Assessee had ceased to carry on any business during the relevant year and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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