TMI Blog1984 (8) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... the branch office is known as " Cotton pressing factory ". There are godowns at both the places. The company owns a vacant site at the branch office. The company stopped its business from January 1, 4965. On their representation, the ITO assessed the income of the company derived from business up to the assessment year 1971-72, though no business was conducted between January 1, 1965, and January 1, 1973. In the orders for assessment years 1972-73 to 1975-76, the ITO, however, rejected their assertion that they are running any business. The Assistant Commissioner, on appeal, reversed the decision of the ITO. On further appeal to the Appellate Tribunal, the decision of the ITO was restored. Thereupon two questions are referred to this cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refer to the four cases dealt with by the Supreme Court. In CEPT v. Shri Lakshmi Silk Mills Ltd. [1951] 20 ITR 451 (SC), it was held at page 456, " no general principle can be laid down ". The question, however, was considered from the standpoint when a concern it ceased to be a commercial asset ". The question was put in the alternative form when an assessee derived income from a commercial unit to state " whether a concern is capable of being used " for profit. The question again was considered in Narain Swadeshi Weaving Mills v. CEPT [1954] 26 ITR 765 (SC) at page 772, and broadly the question was considered from the standpoint of when a concern ceased to be a commercial asset and the referred question was returned. In the third case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vities ", secondly, " any change in ownership of the trade terminating the existing trade and commencing new trade ". The two questions merely spread out the issue in general terms. On a subject which is so much defused, we do not wish to rush into an area where Parliament, the Supreme Court and other State High Courts have not laid down any rule. However, we may, for the purpose of this case, state that the instant case can be discussed from the standpoint of "intention" and that intention can be culled out from the following documents and " conduct " of the company. The company stopped, in the instant case, its business in 1964 due to non-availability of cotton in the market. Till the assessment year 1972-73, their income was assessed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies, explained the necessity of incurring the expenditure on establishment. It was represented that staff was continued to attend to the correspondence of the company, court work and miscellaneous work. As to their continuance, it was represented that they require the experience of the personnel for as and when they revive the business, their services may not be lost to them. In another letter of February 17, 1970, addressed to the Company Law Board, the company furnished particulars of their machinery both at the head office and at the branch office and stated that due to scarcity of cotton, they are not able to carry on the business of ginning and pressing of cotton. They expressed their desire to revive the business of pressing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be understood as periodical renovation of factories. Further, the godowns at the branch office were let out to the National Tobacco Company. The godown at the head office also was let out where the tenants stocked tobacco. In this connection, the Tribunal observed, when tobacco has been stocked, that circumstance is a factor against the contention of the company. It is possible to explain that circumstance to hold that on vacation of the premises by the tenant, it is possible to conceive that cotton again can be stored in the godowns. The question to be considered is whether there was any intention on the part of the company to revive its business when their godowns were let out to tenants and their factories were leased. The contention o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1974-75; and (c) Rs. 2,300 for the assessment year 1975-76. The ITO rejected claims in (a), (b) and (c). The AAC as respects (a) allowed Rs. 4,400 and in full the amounts claimed in (b) and (c). The Revenue did not appeal to assail the allowance of Rs. 4,400 or Rs. 750 or Rs. 2,300. The Appellate Tribunal nevertheless held " the order of the Income-tax Officer was sustained ". Thus, in the background of these facts, the second question is capable of a narrower connotation and wider connotation to include the entire sums set out in (a), (b) and (c). Having regard to the background of facts, the narrower connotation of the question is to be returned in answer. The company, faintly it is argued, can claim deduction under cl. (iii) of s. 57 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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