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TMI Blog2002 (11) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... a business asset or whether the assessee has used the asset and derived rental income as an owner of the property. We are, therefore, of the opinion that the matter requires to be remanded to the Tribunal for fresh consideration - - - - - Dated:- 20-11-2002 - Judge(s) : N. V. BALASUBRAMANIAN., K. RAVIRAJA PANDIAN. JUDGMENT The judgment of the court was delivered by N.V. BALASUBRAMANIAN J.-The question of law referred by the Income-tax Appellate Tribunal for our consideration under the Wealth-tax Act, 1957, in relation to the assessment of the assessee for the assessment year 1980-81 reads as under: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the property let out by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee for its business and therefore, the assessee would be entitled to exemption as provided under section 40(3)(vi) of the Finance Act, 1983. The order of the Income-tax Appellate Tribunal is the subject matter of the reference in the tax case. We heard Mr. T. Ravikumar, junior standing counsel for the Revenue and Mr. R. Kumar, learned counsel appearing for the assessee. We are of the view that the Appellate Tribunal has not applied the correct principles of law to arrive at its conclusion that the letting out a portion of the building by the assessee would be its business and therefore, the let out portion was also used by the assessee for the purpose of business. The Supreme Court in Universal Plast Ltd. v. CIT [1999] 237 ITR 454 aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities, then it is a case of exploiting the business assets otherwise than employing them for his own use for making profit for that business; but if the business never started or has started but ceased with no intention to be resumed, the assets also will cease to be business assets and the transaction will only be exploitation of property by an owner thereof, but not exploitation of business assets." We find that the Appellate Tribunal has not adverted to the deed of lease and the terms under which the property was let out. The Supreme Court in Universal Plast Ltd. v. CIT [1999] 237 ITR 454 has held that the period for which the asset is let out is a relevant factor to find out the intention of the assessee whether he intends to go out o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... memorandum of association is not relevant and what has to be seen is whether the property was let out temporarily and whether the assessee has exploited the business asset. Therefore, the view of the Appellate Tribunal that since the assessee has object in the memorandum of association to let out the property, it would amount to exploitation of the business asset is not sustainable in law. We are of the view that the question whether there is exploitation of the business asset has to be considered not only with reference to the object of the assessee-company as it is only one of the relevant criteria but also with reference to the terms and conditions of the lease and all other relevant factors. The Calcutta High Court in CWT v. Sun Jute Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the matter for deciding the issue satisfactorily. Learned counsel for the assessee strongly relied upon the decision of the Bombay High Court in CWT v. Cema (P.) Ltd. [2001] 248 ITR 629 and submitted that the income of the property was treated as business income under the Income-tax Act and therefore, the asset of the assessee should be taken as a business asset. We are unable to accept the said submission of the learned counsel for the assessee. This court has considered a similar contention in Madras Silk and Rayon Mills Pvt. Ltd. v. ITO/Asst. CIT [2003] 262 ITR 122 T. C. Nos. 171 to 173 of 2001, dated February 11, 2002, and held as under: "However, even considering the question on the merits, we are of the clear opinion that an or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9] 237 ITR 454, whether the assessee has exploited the building or part of the same as a business asset or whether the assessee has used the asset and derived rental income as an owner of the property. We are, therefore, of the opinion that the matter requires to be remanded to the Tribunal for fresh consideration. As a matter of fact, learned counsel for the assessee has not seriously disputed that the matter requires remand. Accordingly, we are not answering the question referred to us, but remit the matter to the Tribunal with direction to go into the matter afresh. It is needless to mention that it is open to the parties to adduce further evidence before the Tribunal or it is also open to the Tribunal to remit the matter to the lower au ..... X X X X Extracts X X X X X X X X Extracts X X X X
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