9911796707
TMI Blog1993 (9) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... r the head 'Income from other sources' ?" The assessee is a company engaged in the business of mining, hiring of barges and other retail business. It has been carrying on the above business during the last fifteen years. In the year 1950, it had acquired six barges which were primarily used for the purpose of carrying the ore belonging to it from its plot to the ships. These barges were also deployed by the assessee on voyage and/or time charter to others as and when it did not have sufficient cargo of its own. For the purpose of deployment of these barges on hire, the assessee had engaged a staff of about 51 people and set up a workshop of its own for repairs and maintenance thereof. During the last six years, the deployment of barges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bare-boat charter" as business income as, according to it, it was merely a change in the method of deployment of barges and not discontinuance of business of running barges. The Income-tax Officer did not accept this contention of the assessee and treated the income from bare-boat charter of barges as "income from other sources". Against the order of the Income-tax Officer, the assessee appealed to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner accepted the contention of the assessee and held that the income from hire of barges was assessable under section 28 of the Act under the head "Profits and gains of business". The Revenue appealed to the Income tax Appellate Tribunal. The Tribunal, on consideration of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uance of validity of survey certificate, etc. The crew was engaged by the charterers. Insurance was also the responsibility B of the charterers. All fees, duties, rates, taxes, etc., payable to the port trust or to the Government or to such other authorities were all on the charterer's account and not on the assessee's account. On a consideration of the totality of the facts and circumstances of the case, the Tribunal arrived at a finding that the intention of the assessee was to part with the barges and the workshop with the obvious purpose of earning rental income and not to treat the barges as a commercial asset during the subsistence of the lease or the charter agreement. The Tribunal, therefore, held the income from hire charges to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the present case are totally different from the facts of the above case. In the case before the Supreme Court, only a part of the machinery was let out on lease and the rest of the machinery was worked by the assessee. The letting out of the machinery was for short period of five months. There was no letting out of the premises or the factory by the assessee. It was on a consideration of also these factors that the Supreme Court held that the assets did not cease to be commercial assets of the business of the assessee. The ratio of the above decision, therefore, has no application to the present case, where the assessee formally and finally discontinued its business of deployment of the barges on voyage charter and time charter and let ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om June 1, 1945. The lease was originally for a period of five years with three options to renew for similar periods on the part of the lessee and an option to the assessee-company to terminate it in any year after the first two years. The assessee's option was not exercised. The consideration of the lease was a royalty payable on the manufacture of sugar and gur at rates specified therein, subject to a minimum royalty of Rs. 65,000 per annum. The lease deed provided that the existing machinery could not be removed by the lessee and that the lessee would be entitled to set up additional machinery without interference from the lessor and to remove them on the termination of the lease. The lessee was entitled to use the railway siding during ..... X X X X Extracts X X X X X X X X Extracts X X X X
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