TMI Blog1993 (11) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... ess income". During the course of assessment proceedings relating to the asst. yr. 1981-82, the Assessing Officer noted that the assessee-company had stopped its business activities and let out on lease its entire assets to Patel Paper Products on yearly licence fee basis. All the expenses like local taxes, cess, electric charges, telephone bills, etc. were borne by the licensee. The lease agreement initially was for a period of 5 years ending in November, 1984. The same was renewed subsequently and as on the dates of the three assessments under appeal the assets continued to be leased out on rent. The assessee claimed that the income from hiring out the plant and machinery along with the business premises was business income. The learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dari Cotton Press Co. Ltd. vs. CIT (1966) 62 ITR 193 (AP) 13. Bolla Tirappanna Sons vs. CIT (1969) 71 ITR 247 (P H) 14. CIT vs. Vikram Cotton Mills Ltd. (1977) 106 ITR 829 (All) 15. Ray Talkies vs. CIT (1974) 96 ITR 499 (Pat) 16. CIT vs. Vania Silk Mills Pvt. Ltd. 1978 CTR (Guj) 141 : (1978) 112 ITR 701 (Guj) 17. CIT vs. Prem Chand Jute Mills Ltd. (1978) 114 ITR 769 (Cal) 18. CIT vs. Kathihar Jute Mills Pvt. Ltd. (1979) 116 ITR 781 (Cal) 19. Everest Hotels Ltd. vs. CIT (1978) 114 ITR 779 (Cal) 20. Addl. CIT vs. Rajendra Flour Allied Industries Pvt. Ltd. (1981) 128 ITR 402 (Del) 21. CIT vs. Northern India Theatres Pvt. Ltd. (1981) 128 ITR 497 (Del) 5. Shri R.I. Patel, the learned Departmental Representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , for five months. There was also no letting out of the premises of the factory by the assessee. The ratio of the decision in Laxmi Silk Mills Ltd. is therefore, not applicable to the present case. In Sultan Brothers Ltd. the assessee, a private limited company, constructed the building on a certain plot of land, fitted it up with furniture and fixtures and let it out on lease fully equipped and furnished for the purpose of running a hotel. The lease provided for a monthly rent of Rs. 5950 for the building and a hire of Rs. 5,000 for the furniture and fixtures. On these facts the Hon'ble Supreme Court held that though the object of the assessee was to acquire land and building and to turn them into account by letting and selling them, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igeration Industries P. Ltd. (1985) 48 CTR (SC) 176 : (1985) 155 ITR 711 (SC), Kishanlal Sons (Udyog) P. Ltd. (1985) 47 CTR (Cal) 37 : (1985) 154 ITR 735 (SC) before the Assessing Officer. The Assessing Officer after considering the cases relied upon by the assessee concluded that in the case of CIT vs. Mother India Refrigeration Industries P. Ltd., it was decided that between the current depreciation and brought forward unabsorbed depreciation set off had to be given to the unabsorbed depreciation. As regards the facts of the assessee in the case of Kishanlal Sons (Udyog) P. Ltd., the Assessing Officer distinguished the facts of the case and held that since no business activities were carried out by the assessee, brought forward deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned CIT(A) has not correctly appreciated the ratio laid down by the Hon'ble Gujarat High Court and has erred in distinguishing the case of the assessee from that decided by the Hon'ble High Court. In that case, there were appeals for two years viz. 1969-70 and 1970-71 assessment years. The business of manufacture of textile had come to an end. For asst. yr. 1969-70 some business income was claimed but for 1970-71 assessment year, there was no income from business and the Gujarat High Court held that even in the case of 1970-71 assessment year unabsorbed depreciation had to be allowed. 10. The learned Departmental Representative relied upon the orders of the authorities below. 11. We have considered the rival submissions. The vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al fiction." "Prima facie, it appears that to call upon the assessee to comply with all the three ingredients of s. 32(1) of the Act for the following previous year or the succeeding years would amount to putting at naught the legal fiction and the purpose for which it is made." The ratio of the Gujarat High Court judgment therefore comes out loud and clear and whether there is any business income or not the unabsorbed depreciation has to be allowed against any other head. Respectfully following the judgment of the jurisdictional High Court we hold that the assessee is entitled to set off of unabsorbed depreciation against the rental income. This ground accordingly succeeds. 12. In grounds No. 4, 5 6 it has been contended that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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