TMI Blog2004 (7) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... e cannot be said to have been incurred wholly and exclusively for the purpose of the business as no connection had been established between the expenditure incurred and the activity undertaken by the assessee. Even otherwise, the findings recorded by the Tribunal are pure findings of facts. - assessee’s appeal is dismissed - - - - - Dated:- 2-7-2004 - Judge(s) : N. K. SUD., S. S. GREWAL. JUDGMENT The judgment of the court was delivered by N.K. Sud J. - This order shall dispose of two appeals, viz., I.T.A. Nos. 121 and 122 of 2004, involving common questions of law and facts. The assessee has filed these appeals under section 260A of the Income-tax Act, 1961 (for short "the Act"), against the orders of the Income-tax Appellate Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed. The assessee explained that it was running two units: one at Kila Zaffaragarh (District Jind) and the other at Rajpura (District Patiala). The unit in Jind was incurring huge losses and, therefore, the management had taken a decision to dispose of this unit to avoid losses. It was also claimed that the assessee had made efforts to sell the unit but no buyer was available and, thus, the unit was sold to its sister concern, M/s. I.C.L. Steel (Haryana) Limited. It was further explained that since certain orders were still to be fulfilled, the unit was taken on lease on the same day. The Assessing Officer did not accept this explanation and held that the arrangement by the assessee was only to reduce the tax liability. Accordingly, the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment under section 143(1) of the Income-tax Act and not under section 143(3) of the Income-tax Act, so, no addition made in the assessment year 1992-93 does not debar the Assessing Officer in making addition in the assessment year 1993-94 in view of the conclusions of the facts arrived at by the Assessing Officer in the assessment year 1993-94 under question because even in the citation relied upon by both the parties, the ratio of the decision is that on considering certain facts and material circumstances of the case and after recording proper reasons, the assessing authority could depart from its previous view taken in the earlier assessment year. 24. Now, coming to the other plea taken by the assessee that it gave interest-free l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material was left behind though the assessee claims to have done manufacturing in the assessment year 1993-94. On the contrary, the learned Departmental Representative for the Revenue has argued that no manufacturing was done by the assessee in the assessment year 1993-94. 26. Now coming to the issue of commercial exploitation and commercial expediency, from the facts it appears that by this transaction of sale of assets and taking the same assets back on lease at a monthly rent of Rs. 1.50 lakhs and also out of sale proceeds advancement of loan of Rs. 50 lakhs by the assessee to the buyer, M/s. ICLS Ltd., the assessee apparently does not seem to have gained anything what to talk of reducing its own losses. On the contrary by this transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision mentioned hereinabove as well as for the reasons as discussed by us hereinabove in this order. 27. Hence on considering the facts and circumstances of the case, we are unable to agree with the submissions of the learned authorised representative for the assessee. The question as to whether an item of expenditure is wholly and exclusively laid out for the purpose of the business or not, has to be decided on the facts of each case, the necessary condition being that it must be laid down or expended wholly or exclusively for the purpose of the assessee's business is that it is incurred by the assessee as incidental to his trade for the purpose of getting the trade going and by making it pay and in any capacity as a trader. The w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of which the assets sold by it had been taken on lease. It failed to produce any evidence to show any manufacturing done by it. It has also been found as a fact that the sister concern also did not carry out any business activity after purchasing and leasing of the assets. In the face of these glaring facts, the Tribunal has rightly drawn the conclusion that the transactions entered into by the assessee with its sister concern were not genuine and had been entered into merely to divert its profits to the sister concern. In these circumstances, the Tribunal has rightly held that the expenditure cannot be said to have been incurred wholly and exclusively for the purpose of the business as no connection had been established between the expen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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