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TMI Blog2003 (12) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment and order of the Income-tax Appellate Tribunal in respect of the three assessment years, namely, 1978-79, 1979-80 and 1981-82. The facts relevant for the present appeal are that the petitioner, a public limited company, is engaged in the business of manufacture and sale of sugar in the sugar mills of the petitioner situated at Motihari. The petitioner operated the said factory which was mortgated to the Bihar State Financial Corporation and to the Industrial Financial Corporation of India. In view of the losses suffered by the petitioner-company, the petitioner leased out the said factory to the lessee, M/s. Gobind Sugar Mills Ltd., by a lease agreement dated May 1, 1969, for a period of five years under the terms and conditions recorded in the lease deed. The rent payable under the said lease were to go to the financial corporations to liquidate their respective dues from the petitioner. On an expiry of the said period another lease was executed on April 19, 1974, followed by a third lease deed dated April 30, 1979. Subsequent lease deeds again were executed for further periods which do not govern the subject periods. In respect of each assessment year, the lease rent r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in granting the lease by one lease deed, is held to be not parting with the assets finally and for using it as commercial assets, for the continuing period of the same lease deed, no different finding can be reached. It is contended that though the principle of res judicata strictly does not apply in respect of income-tax matters and each assessment year has to be treated as a separate unit once an Assessment Officer comes to a finding in respect of the facts of the particular assessee for one particular year, for subsequent assessment years for the same aspect the same finding should ordinarily be reached unless the facts are found to be different and in case a different finding is reached, appropriate reasons therefor are to be recorded. It is further contended that when in respect of the periods covered by similar lease deeds in respect of the earlier periods from 1969-70 till 1977-78 and for subsequent periods including 1988-89, the income-tax authorities accepted the lease rent income of the assessee as business income, then treating the similar income for intermediate three periods as income from other sources without there being any special reason nor any difference in ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on filed by the Revenue for directing the Tribunal to make a reference in respect of the assessment year 1980-81 and therefore, the Tribunal in the impugned judgment relying on the same took a correct decision. Reliance was placed by learned counsel for the Revenue on the judgment in the case of Instalment Supply (Pvt.) Ltd. v. Union of India [1961] 12 STC 489 (SC); AIR 1962 SC 53 and Addl. CIT v. Sagoon Builders (P.) Ltd. [2001] 250 ITR 868 (Delhi). Considering the aforesaid contentions, we find that the facts involved in the case are more or less admitted. Law also is settled for a long time that in the case of such grant of lease in respect of the assets of the assessee in favour of a lessee, whether the rent income is business income or income from other sources, has to be ascertained from the attending circumstances for ascertaining the intention of the assessee as to whether the assets have been given on lease on temporary basis to meet some situation not within the control of the assessee or for finally parting with the property. The said aspect was considered by the apex court in the case of New Savan Sugar and Gur Refining Co. Ltd. v. CIT [1969] 74 ITR 7 wherein vari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporated in the deeds of lease executed from time to time. But the intention, that the directors of the assessee to remain associated with the management of the factory, even after the lease, has neither been incorporated in the lease deeds nor has been shown to be implemented. The first lease deed dated September 1, 1969 (annexure A to the petition in the appeal), shows the terms and conditions under which the lease had been granted. The subsequent lease deeds were also on substantially the same terms and conditions. It appears from each of the deeds that the part of the lease rent was to be paid to the Industrial Financial Corporation of India to the extent the amount was payable by the assessee to the said Financial Corporation. The lessor also enjoyed the power to inspect, supervise and advise in respect of maintenance of the building and machinery. The lessee was to contribute during the period of lease all contributions and charges to Sri Hanuman Sugar Employees Provident Fund and Employees State Insurance contribution payable for the workmen of the factory and to maintain such staff for the said factory as may be required. The lessee was also under obligation to continue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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