9911796707
TMI Blog1985 (11) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... ors could be protected. The assessee-firm, which was granted registration by the Income-tax Officer, came into existence in June, 1960, primarily, to work Shanmugar Mill, Rajapalayam. A petition was filed before the High Court in O.P. No. 279 of 1957 for stay of the sale and direction to the official liquidator to grant lease of the mill to the assesseefirm. The sale of the mill was stayed. A list of creditors of the company was also drawn. The mill was leased to the assessee for a period of ten years on a monthly lease rent of Rs. 6,000. The lease rent was subject to modification with the increase in spindleage capacity of the mill. The lessee was directed to instal additional spindles secured from the Government grant, to make the necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, the Appellate Assistant Commissioner, however, held that the assessee is money-lender, that the loss is attributable to its money-lending business and that it cannot be held to be capital in nature. Accordingly, the assessee was held to be entitled to the deduction. This order was confirmed by the Tribunal. Learned counsel for the Revenue strenuously contended that though the assessee may be a money-lender and is also carrying on the business of money-lending, this sum of Rs. 8,66,600 advanced to the official liquidator formed part and parcel of the lease agreement and, therefore, cannot be treated as an advance in the course of the carrying on of the business as money-lender and in reality it is of the nature of investment. He also co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to facts. In this case, as stated earlier, the lease was for a period of ten years primarily on a lease rent of Rs. 6,000 per mensem. The lease rent is also subject to modification with increase in the spindleage capacity of the mill. The assessee is also a moneylender and it is in evidence that it was also assessed as a money-lender with reference to the business carried on by it as money-lender. The assessee was entitled to interest even as per the order of the court at the rate of 71 per cent. on the advances made to the official liquidator. The advances also were directed to be given by the court in order to enable the liquidator to discharge the creditors of the company. Though the order of the court is of the same date, namely, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of money-lending. The facts in this case clearly show that these two transactions of lease and advancing money to the liquidator were kept separate from the beginning and not linked one to the other and the assessee was always keeping separate its dual capacity in regard to these two transactions. We, therefore, have to agree with the Tribunal that the loss has to be regarded as a direct result of the assessee's continuing the business of money-lending and the loss is not of a capital nature. It was then contended by learned counsel that, in any case, this is not an allowable deduction in the assessment year 1970-71 as the sale itself was in February, 1969. This contention has been raised ignoring the fact that the sale was confirmed onl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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