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TMI Blog1980 (4) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... affirmative, whether the assessee is entitled to deduction for the expenses ? " In order to appreciate the points involved in this application it is necessary to state some facts. The assessee, M/s. Selected Jharia Colliery Co. is a private limited company and derives income from colliery. Another private limited company, namely, M/s. East Bhugatdih Colliery (P.) Ltd. is situated contiguous to the assessee-company. By a deed dated March 5, 1963, the assessee-company and Bhugatdih Colliery were amalgamated for the sake of convenience and economic working and development of both the collieries. The amalgamated unit was to be known under the name and style of East Bhugatdih Colliery, and it was to carry on business operations in both the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO for a fresh assessment in accordance with law, and the assessee-company was given full opportunity to file their papers in support of their case, relying on certain decisions which I will refer to later. At the instance of the department, the Tribunal has stated a case which has been stated above. Mr. B. P. Rajgarhia, learned counsel appearing on behalf of the department, has submitted that on reading the agreement it appears that it was a clear case of lease, because the entire management, control and administration of the company was transferred to Bhugatdih Colliery, and the Tribunal has, therefore, erred in law in accepting the case of the assessee. In support of his contention, reliance has been placed on the decision in New Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a minimum guaranteed profit of Rs. 7,000 per month." Reading the aforesaid terms and conditions of the agreement it is clear that the intention of the assessee was to part with the entire machinery and other units of the concern with the sole purpose of earning rental income, and it was never the intention of the assessee to treat the concern as a commercial concern during the period of the agreement. Thus, there was no direct nexus between the income of the assessee and the production of the colliery. The intention of the assessee, therefore, was clearly to go out of the business for a fixed term of years altogether so far as the colliery and its machinery were concerned and to use the income as the owner of the colliery. The Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere business income, because there was a relationship of principal and agent between the assessee and the managing contractor, which is also clearly distinguished from the facts of this case because of the fact that when it was given for management to a third person the sole object was to have better management to earn more income. Thus, on a careful consideration, I am of the opinion that the Tribunal has committed an error of law in accepting the contention of the assessee. The answer to the first question is in the negative, and, in view of this finding, the second question does not arise. The reference is, therefore, answered in favour of the department; but since there is no appearance on behalf of the assessee, there will be no orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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