TMI Blog1994 (2) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... alty and the penalty levied should be cancelled. 2. The assessee is a limited company and earns income from property and business. The assessment year involved is 1980-81. In order to giving proper focus to the issue involved in this appeal, it is considered necessary to refer to the assessment proceedings which highlight the relevant facts which are required to be taken into account in deciding the appeal. 3. The assessee-company owned a property at Juhu known as Ruia House. It is situated at a plot of land measuring 18,936 sq. yds. The property has a guest house, swimming pool and own arrangement for water supply. It was given on rent of Rs. 5,000 per annum to Shri Radhakrishna Ramnarain Ruia, HUF who is having controlling interest in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue was restored to the Assessing Authority and ultimately, the Tribunal by its order dated 26-2-1991 in ITA Nos. 758 773 (Bom.)/87 held that the assessee had no legal right reserved for using Ruia House for the purpose of film shooting and the expenditure incurred did not relate to film shooting and, therefore, the assessee was not entitled to have deduction for film production. 4. In view of the aforesaid background, we shall consider the relevant facts applicable to penalty. The assessee filed estimate of advance tax in form No. 29 on 11-9-1979 estimating the advance tax payable at Rs. 3,494 and paid instalment of Rs. 1,165 on 14-9-1979. Loss return was filed and revised at Rs. 1,01,666. However, the Assessing Officer has determine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... source of income and which also entailed incurring of huge expenditure by way of repairs and renovation to keep the property attractive for that purpose, the assessee has entertained a belief that that part of the activity constitutes business activity. There was periodicity of receipt income and periodicity of expenditure incurred for earning such income. The question whether it amounts to a business or the question whether the expenditure incurred by the assessee could be allowed entirely as business expenditure or restricted under the head 'property income' could not have been visualised or contemplated because the assessee could not have anticipated the decision of the department in advance. In short, the assessee has entertained a beli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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