TMI Blog1992 (4) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... on business are perverse and/or contrary to the materials on record ?" The assessment year involved is 1982-83. The facts as they appear from the statement of case, inter alia, are that the assessee was incorporated in 1960 and carried on board mill business up to 1971. In April, 1971, the assessee found certain difficulties and, consequently, on April 13, 1971, the factory was leased out to Messrs. Shree Sankar Paper and Board Mills on monthly rent The lease rent received from the lessee was assessed as business income of the assessee up to the assessment year 1978-79. The lease was given for a period of nine years and six months from October 1, 1971, and the lease was to expire on March 31, 1981. The lease rent received by the assessee for the assessment year 1979-80 was taken by the Income-tax Officer as income from "Other sources". However, on appeal, the Commissioner of Income-tax (Appeals) directed that the same should be assessed as income from "Business" and the same position continued up to the assessment year 1981-82. In the assessment year 1982-83, the lease expired and consequently a notice was given by the assessee to the lessee to hand over possession of the mill to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stinguished by the Departmental Representative. Firstly, in the said case, the assessee was having another business also. Further, the mill was under the possession of the assessee. In the present case, the assessee had only one business and that business was leased out and the mill is under the possession of the lessee. Therefore, it cannot be said that the assessee was in a position to carry on the business. On the said facts, the finding given by the Commissioner of Income-tax (Appeals) is correct." It has been submitted by Mr. Dutt, learned advocate for the assessee, that the business of the assessee remained under suspension only for the time being and the assessee-company was never closed. Expenditure was incurred for holding its board meeting and the annual general meeting and remuneration of the directors and other staff were also paid. The assessee also wanted to restart the business. In fact, after the expiry of the lease, the assessee issued a notice of ejectment and instituted the suit before the civil court for recovery of possession of its factory premises so that the business may be carried on again. Under such circumstances, the assessee submitted that the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the company stopped manufacturing chemicals in 1955 due to acute financial stringency. The assets of the company had been mortgaged to the Industrial Finance Corporation of India and, with the consent of the Industrial Finance Corporation of India, the premises of the company were leased out to C. P. Ltd., and I. C. Ltd., in 1957 and 1958. The assessee retained a portion of the premises for its own use and it kept its plant and machinery after they were dismantled from the premises which were let out to C. P. Ltd. an I.C. Ltd., The assessee got a loan from DHT on mortgage of land and building in the year ending August 31, 1961, and the liabilities of the Industrial Finance Corporation of India were discharged. It was not till August 31, 1967, that the assessee was able to establish a plant in Bhilai. The directors' report for 1953-54 to 1966-67 showed that the company had run into losses year after year ; on May 11, 1955, the loss was shown as Rs. 1,54,486.14.6. This increased to Rs. 2,34,382 on August 31, 1955. For the assessment years 1959-60 to 1962-63, the Income-tax Officer disallowed the claim of the assessee for certain expenditure and depreciation and for allowance of un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r: (a) The assessee had let out its commercial assets, the entire productive unit, for an interval of nine years and six months on monthly rent as a means to overcome its financial crisis. (b) The Revenue accepted the letting out of the mill as an alternative means of commercial exploitation of the mills and assessed the rental income from the mill as income under the head "Business" throughout the course of the lease. (c) The Revenue impliedly accepted that for all this period of nine years and six months, the assessee had been harbouring an intention to restart the business. (d) The intention is projected unmistakably from the fact that the assessee has taken steps for the eviction of the lessee holding on after the expiration of the term of the lease. According to the Tribunal, the assessee not being in possession of the mill even after the expiry of the lease and the matter being sub judice in the court, it cannot be said that the assessee has any intention to restart the business. The inference is anomalous. The holding on to the property is the act of the lessee, not of the assessee, the lessor. The assessee has taken action for ejectment of the lessee who, after th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss without there being any material. Such a conclusion is not based on the facts stated by the Tribunal. If the fact that the assessee on expiry of the lease of the mill has sued the lessee for holding on remains uncontested, there can be no reason to forecast that it would be an impossibility for the assessee to re-enter into the mill for recommissioning its business of manufacturing. The paper book contains the copy of the plaint in the subject suit being Title Suit No. 42 of 1982 filed in the Second Court of the Subordinate judge at Alipore. On perusal it appears that the suit is for ejectment of the lessee as well as mesne profits for holding on. Therefore, the Tribunal's finding that the assessee either did not intend to nor could it be in a position to restart the business is based on no evidence. We accordingly answer the second question referred under section 256(2) in the affirmative and in favour of the assessee and against the Revenue. Consequentially, the first question is answered in the negative and in favour of the assessee. The Tribunal is, however, directed to examine if any part of the running business expenses are disallowable otherwise. There will be no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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