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2014 (11) TMI 180 - HC - Income TaxClassification of income – Income from profits and gains of business or income from other sources - Reopening of assessment justified or not - Held that:- Where an assessee lets on hire machinery, plant or furniture belonging to him and also buildings, and the letting of the buildings is inseparable from the letting of the machinery, plant or furniture, the income from letting, is chargeable to income-tax under the head "Profits and gains of business or profession" - If for any reason it is not so assessed, then it should be assessed under the head 'income from other 'sources' –the assessee commenced his business - At the inception he had no intention of letting out the building, machinery and licence to anyone - He set up the business for carrying on the business - He was expecting income. In 1980's because of the labour problem, as the assessee found it difficult to carry on the business, he leased this entire business as a going concern with the licence in favour of the lessee M/s McDowell and Company and thus was deriving income from such lease and treated the said lease under the head 'profits and gains of business or profession' - The assessee was so assessed. Without any justification whatsoever, notice was issued for reopening of the assessment for the AY 1997-98 and 1998-99 – The Tribunal was rightly of the view that mere change of opinion would not be a ground for reopening of the assessment especially when from 1980 onwards the assessment was made on the very same basis and, therefore, no fault could be found with that portion of the order - also, what is leased is the commercial assets of the assessee - Earlier he was personally exploiting the commercial asset - Subsequently, he allowed the lessee to exploit that commercial asset - When he gave the commercial asset to the lessee, the intention was not to lease - The intention was to exploit the commercial asset through his expertise and derive income - in view of Section 56(2)(iii) and the decision of Supreme Court in CEPT v. Shri Lakshmi Silk Mills Ltd. [1951 (9) TMI 1 - SUPREME Court] - the income should fall under the head 'profits and gains of business' and not from 'income from other sources' – Decided against revenue.
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