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TMI Blog2010 (3) TMI 1227X X X X Extracts X X X X X X X X Extracts X X X X ..... n printing job in Times of India and other newspapers on behalf of Bennett Coleman Co. Ltd. During the year under consideration, the assessee had incurred loss of ₹ 22,31,246/-. He submitted that the accounts of the assessee are audited. All the bills/vouchers along with complete details of expenses and books of account were duly produced during assessment proceeding, wherein no specific defect could be pointed out by the A.O. or there is no finding that any particular expenditure was not related to assessee's business. The A.O., however, on mere surmises and conjectures disallowed the entire business loss on the ground that there was no business activity during the year under appeal. While doing so, he even disallowed statutory e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve as well as to meet up the financial crisis, the assessee exploited commercial assets by letting them out on rent. As is evident from P/L Account, the assessee also earned in addition to rental income, income from service charge/commission. The A.O. in his assessment order has not pointed out any irregularity in maintaining the books of account or to indicate any expenditure which was, according to him, not related to business expenditure. He disallowed the loss claimed by the assessee only on the ground that the assessee had no business activity during the year under consideration. On the above facts, the Ld. C.I.T.(A) allowed the business loss claimed by the assessee by holding as under :- The Assessing Officer disallowed an amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. CIT [202 ITR 796]. It has been held in the following cases that if a business remains in temporary lull or if its activities are kept under suspension temporarily, the business cannot be considered to have been closed or discontinued. The period of temporary lull of the business is thus required to be treated as its continuation. i) Lakshmi Narayana Board Mills Pr. Ltd. [205 ITR 88 (Cal)at 91-92] ii) Vikram Cotton Mills Ltd. 169 ITR 597 (SC) iii) CIT vs. United Collieries [49 Taxman 227 (Cal)]. The same analogy would hold good in respect of the relative importance of two or more businesses being carried on by a concern. Simply because the volume of the principal business goes down temporarily, it cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose down the business or it has already closed down its business activities. Therefore, simply on the reason that there was temporary cessation of business, the A.O. was not justified in disallowing the loss incurred by the assessee. In this view of the matter, we uphold the order of the Ld. C.I.T.(A) on this issue and this ground of the revenue is rejected. 4. The next ground of the Revenue is against direction of C.I.T.(A) to treat the interest income of ₹ 32,676/- as business income as against income from other sources taken by the A.O. The assessee in its P/L Account had shown interest income of ₹ 32,676/- as business income. The A.O. allowed 10%, i.e. ₹ 3,267/- as incurred by the assessee for earning this income an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, therefore, assessable as business income and revenue expenditure could be deducted from it. The ratio of the above decision would be squarely applicable to the case of the assessee because the facts are identical. It has been stated by the assessee's counsel that interest has been earned on the utilization of commercial assets which were lying in the form of surplus fund. The above factual assertion has not been controverted by the Revenue. In view of the above, we respectfully following the decision of Hon'ble jurisdictional High Court uphold the order of the C.I.T.(A) directing the A.O. to assess the interest income as business income. This ground of the department is dismissed. 5. The next ground in this Revenue's a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written back ₹ 49,144 iii) Service charges ₹ 8,40,000 6.1. We have heard the parties and perused the material placed before us. While dealing ground No.1 above, we have already held that the assessee during temporary lull in the business has earned income by exploiting its commercial assets and as per law as discussed above the same is to be treated as business's income. The Ld. C.I.T.(A) following the decision in the case of CIT vs. Katihar Jute Mills (P) Ltd. [116 ITR 781 Cal)] directed the A.O. to treat the service charges of ₹ 8,40,000/- as assessee's business income. Similarly in the case of rental income of ₹ 1,75,000/-, the A.O. treated the same as income from house property. During temporary ces ..... X X X X Extracts X X X X X X X X Extracts X X X X
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