9911796707
TMI Blog2001 (8) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... in this regard, arising out of its special relationship with the sick company, amounts to allowing the said company free tenancy and as such the provisions of rule 4(b) are not satisfied and consequently the deduction as contemplated under section 24(1)(x) of the Income-tax Act, is not available to the assessee; 4. The Hon'ble CIT(Appeals) failed to appreciate and take note of the special relationship between the partners of the assessee-firm and the promoters of the company; and 5 ...... 3. The Assessing Officer mentioned that the assessee-company let out one of its properties to M/s. Sri Rayalaseema Paper Mills (hereinafter referred to as 'SRPM' for brevity) and it has been declaring income from the said property. For the assessment year 1989-90, the rental income disclosed was of the order of Rs. 82,755. However, no such income was disclosed for the three assessment years under appeal before us. It was explained before the Assessing Officer that the said SRPM became a sick unit and has been referred to the Board for Industrial and Financial Reconstruction (hereinafter referred to as 'BIFR' for brevity) in the year 1989-90. It was also explained that revival process by the Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; 780 ----------- 81,975 &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 72,000 Add: Municipal Taxes debited to P&L A/c. 780 but already considered in the above computation. ----------- &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant-firm at the time of hearing filed a paper book which contains a certificate passed by the Board under section 3(1)(c) of the Act holding the company to be a sick industrial company within the meaning of that provision as the conditions laid down therein are satisfied. The mistake apparent from record has been brought to my notice by the appellant-firm by petition for rectification under section 154 of the Income-tax Act dated 29-3-1996. I am satisfied that it is a case of mistake apparent from record. I, therefore, direct the Assessing Officer to allow benefit for deduction under section 24(1)(x) of the Income-tax Act as the company has been declared to be a sick industrial unit by the Board for Industrial and Financial Reconstruction. In the result, all the three appeals are allowed." Aggrieved by the above order of the CIT(A), Revenue preferred these appeals before this Tribunal. 5. When the appeals were posted for hearing on 14-5-2001, the notice of hearing sent to the assessee was returned by the postal authorities unserved. Hence, the appeals were adjourned to 4-7-2001, and notice of hearing for that date was got served through the Department. In response, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vacated the premises or steps have been taken to compel him to vacate the property. Under Rule 4(d), the assessee is also required to take all reasonable steps to institute legal proceedings for the recovery of unpaid rent, or in the alternative, satisfy the Assessing Officer that legal proceedings would be useless. We do not see how these conditions are satisfied by the assessee in the present case. The CIT(A) has simply mentioned that the BIFR passed an order declaring the assessee to be a sick industrial company. A copy of this order is not available with us and it must have been filed before the CIT(A). What follows from such an order passed by the BIFR is not spelt out by the CIT(A). 7. Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, which deals with 'suspension of legal proceedings, contracts, etc.' reads as under - "22. (1) Where in respect of an industrial company, an inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation for consideration or a sanctioned scheme is under implementation or where an appeal under section 25 relating to an Industrial company is pending, then, notwithstanding anything ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n otherwise, as mentioned by the Assessing Officer, no steps are proved to have been taken to obtain the permission of the BIFR for instituting legal proceedings either for eviction or for realisation of unpaid rent. The remark of the Assessing Officer that the promoters of the tenant-company are the partners of the assessee-firm cannot also be ignored. The failure of the assessee-firm to have taken any legal steps for obtaining vacant possession of the premises or for the realisation of unpaid rent has to be seen in the context of the above remarks of the Assessing Officer. 8. In the circumstances, we are forced to the conclusion that the conditions specified in Rule 4(b) of the Income-tax Rules are not satisfied. So, the assessee is not entitled for relief under section 24(1)(x) of the Incometax. In our view therefore, the CIT(A) is not justified in granting relief to the assessee in this behalf. We accordingly set aside the impugned order of the CIT(A) dated 13-6-1996 passed under section 154 of the Act, and restore the additions made by the Assessing Officer by disallowing the assessee's claim for relief under section 24(1)(x) of the Act, for the years under appeal, accepting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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