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TMI Blog2015 (1) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... D MR. K.J.THAKER, JJ. MR KM PARIKH, ADVOCATE FOR THE APPELLANT JUDGEMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. By way of this appeal, the appellantrevenue has challenged the order dated 24.09.1999, passed by the Income Tax Appellate Tribunal, Ahmedabad [for short the Tribunal ] in ITA No.3461/Ahd/93, whereby the appeal preferred by the revenue was partly allowed. 2. The facts in brief are that the respondentassessee is engaged in the manufacturing of sodium Metal and Transportation of goods. The assessee had filed its return of income on 31.12.1990 for the assessment year 199091 and declared total income at ₹ 25,17,082/. The return was processed under Section 143(1)(a). Thereafter, the Assessing Officer, after scrutiny, passed order under Section 143(3) of the Income Tax Act and charged interest. Against the order of the Assessing Officer, the assessee filed an before before the Commissioner of Income Tax, Baroda. The CIT(A), vide order 30.06.1993 allowed the appeal of the assessee. 2.1. Being aggrieved and dissatisfied with the order of the CIT(A), the revenue filed an appeal before the Income Tax Appellate Tribunal. The Tribunal vide or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one. Rebutting the claims of the appellant, the Assessing Officer observed that it could not be said that the premises were given on lease temporarily. Secondly, the activity of leasing out was not of the object of the company. Since the main object of the company was to carry on the business of manufacturing, purchasing selling refining etc. of sodium and other chemicals, by no stretch of imagination could it be said that by giving on rent the factory in which the company itself was a partner, which was to manufacture shoe polish from the first day of its incorporation would help the appellant company in manufacturing of even trading of sodium or its by product. Therefore, in the opinion of the Assessing Officer, income from lease rent was income from other sources and therefore, deduction u/s. 32AB was not allowable to the appellant company on this income. 4.2. Similarly, bar interest on debentures, the Assessing Officer has observed after referring to the language of Section 32AB(3)which refers to business income as understood in the commercial sense. Therefore, in his opinion, the very fact that the appellant company itself has stated that the purpose of bor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference in recent decision in the case of Apollo Tyres Ltd. Vs. Dy. CIT (coch), 43 ITD 463, wherein it has been observed as under: The assessee had purchased certain machinery or plant from out of its income chargeable under the profits and gains of business or profession. The assessee included the amount representating the dividend on units of UTI in computing the profits of eligible business. The Dy. Commissioner excludes both the amount from the computation of profits of eligible business. On appeal the commissioner (Appeals), sustained the assessment order. From the language of Section 32AB(1) and the Board s circular no.461 dated 9.7.1986 issued thereunder, it is clear that investment deposit or the purchases of a new asst or plant must have come out of the income chargeable to profit and gains of business or profession. Since the income from units of UTI was chargeable under the head income from other sources, the same could not be construed as forming part of the income chargeable to tax under the head profits and gains of business or professional. . But the definition of eligible businessor profession is a wide sense. Except, those business speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel for the appellant, which are as under:Page 1) CIT Vs. Shri Lakshmi Silk Mills Ltd. (1951) 20 ITR 451 (SC). 2) CIT Vs. national Mills Co. Ltd. (34 ITR 155) (Bom.) 3) CIT Vs. Prem Chand Jute Mills Ltd. (1978) (114 ITR 769) (Cal.). 4) CIT Vs. Hindustan Aluminium Corpn. Ltd. (176 ITR 206 at page 207208 (cal.) 5) CIT Vs. Shaan Finance (p) Ltd. (109 CTR 209 (Kar.) 6) CIT Vs. New India Industries Ltd. (201 ITR 208) at page 246/247. Laid down the following principles:1) Lease rent derived from exploration of commercial asset is required to be treated as business income and not income from other sources. (ii) The fact that machinery and plant which is exigible to relied under section 32A (investment Allowance) or Section 33 (Development Rebate) should not be necessarily exploited by the assessee himself, even if the said machinery is exploited by some other person as commercial asset, the relief under Section 32A / Section 33 would be still available. (iii) The expression wholly used does not mean that it should b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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