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TMI Blog2012 (3) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... et off against the income returned by the assessee being only the income from the house property after the closure of the business in the earlier years ?" 2. The respondent-company, hereinafter referred to as "the assessee", was engaged in the business of manufacturing and selling of aluminium con- ductors. On completion of the assessment under section 143(3) of the Income-tax Act for the assessment year 2001-02, it was noticed that the assessee had taken land on sub-lease and constructed godowns and getting rental income in which no manufacturing activity was carried on. The only income derived by the assessee was rental income and related charges. Hence, after a show-cause notice, the benefit of the provisions of section 71 was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 263 of the Income-tax Act. Challenging the said order, the Revenue has preferred the present tax case appeal. 4. The learned counsel for the Revenue vehemently contended that the order passed by the Tribunal is illegal, wrong, without any basis and, there- fore, the same should be set aside. It was further contended that the Tri- bunal is wrong in holding that the Commissioner of Income-tax was not justified in revising the assessment order. It was also contended that when the assessee had closed the business, the assessee is not entitled to claim the deduction of expenditure and set off of business loss against the income from house property. The Tribunal ought to have seen that there was no accrual of interest expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of a sister company and, therefore it cannot be said to be revival of the old business. So far as this issue is concerned, we may refer to the Division Bench judgment of this court in CIT v. S. S. M. Ahmed Hussain [1987] 164 ITR 525 (Mad), wherein this court, following the judgment of the Supreme Court in Standard Refinery and Distillery Ltd. v. CIT [1971] 79 ITR 9 (SC), observed that in the event there had been unity of control and management in respect of a composite business, the benefit of section 71 would be available to the assessee. That was a case where the assessee was initially carrying on the business of distribution of cinema films and purchase and sale of National Defence Remittance Scheme Certificates. As there was a busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income-tax, having referred to the fact that the assessee had started the business of purchasing and selling of aluminium foils and other materials as a distributor from the year 2003-04, has gone wrong in holding that the said activity cannot be considered to be a revival of the old business. The Commissioner had not adverted to the judgment of the Division Bench of this court, which we have referred to in the earlier portion of the order. Having noticed the above, the Tribunal has rightly appreciated the law and issue and has found that even though there was a temporary break, the assessee continued the business in dis- tributorship and also maintained the establishment, thereby incurred the expenditure which were wholly and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccrued after March 14, 1996. It is undisputed that the assessee has been follow- ing mercantile system of accounting and on this basis this liability does not pertain to the year under consideration and just because payment has been made it cannot be allowed as an expenditure of this year. Annexure I Madras Electrical Conductor Sl. No Inv. No. Date Amount (Rs.) Due date Date of payment Default day Rate Int. (Rs.) 1 CCS6679 26-2-1994 10,21,816 13-3-1994 29-3-1994 16 4,031 2 CCS6773 3-2-1994 14,63,591 17-3-1994 29-3-1994 12 9 4,330 3 CCS6796 3-3-1994 14,60,504 18-3-1994 29-3-1994 11 9 3,961 4 CCS6917 3-8-1994 4,80,991 23-3-1994 4-11-1994 19 9 2,253 5 CCS0078 4-7-1994 2,85 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est during the accounting year. When we asked a specific question on the above to the learned counsel for the assessee, the counsel was unable to produce any evidence. Even though these facts were already recorded by the Tribunal in its order, no finding in respect of the same was given on the merits. In view of the above factual position, to that extent the order of the Commissioner of Income-tax passed under section 263 is valid in law and he has jurisdiction to revise the order. Under these circumstances, we answer the first substantial question of law in favour of the Revenue and against the assessee. 10. In respect of the second substantial question of law, we partly allow the appeal in favour of the assessee, i.e., the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X
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