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Commissioner of Income-tax Vs. Arcust Industries P. Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMadhya Pradesh High Court
Decided On
Case NumberMiscellaneous Civil Case No. 83 of 1979
Judge
Reported in[1982]133ITR290(MP)
AppellantCommissioner of Income-tax
RespondentArcust Industries P. Ltd.
Appellant AdvocateS.C. Bagadiya, Adv.
Respondent AdvocateNone
Excerpt:
- - , and it was to comply with this obligation that the plant and machinery had been leased out for a better management, so that the contractual commitment may be fulfilled. 4. clearly, this finding is one of fact based on the material placed before the appellate tribunal and, therefore, no question of law as such arose from the order of the tribunal......going through the same we are of the opinion that the income in question should be considered as business income and not income from other sources.'3. the appellate tribunal, after examining the facts of the case, held that the assessee had commenced manufacture of oil and diesel engines and the plant and machinery were in full running condition. further, the assessee had entered into an agreement with a calcutta company for the sale of the engines and pumps, etc., and it was to comply with this obligation that the plant and machinery had been leased out for a better management, so that the contractual commitment may be fulfilled. according to the tribunal, it was a case of commercial exploitation and the income from the lease was business income.4. clearly, this finding is one of fact.....
Judgment:

Shukla, J.

1. The Income-tax Appellate Tribunal, Indore Bench, Indore, has stated the case and referred the following question for our opinion :

'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the income from lease rent was assessable as income from business and not as income from other sources ?'

2. As, according to us, on facts stated, no question of law arises, we decline to answer the same. The year of assessment in question was 1971-72 for which the accounting period ended on January 31, 1971. The assessee carried on the business of manufacture of oil engines and pumps, etc., for agricultural use. It ran into loss arid, consequently, leased out the plant and machinery to another manufacturer. The lessee continued the manufacture of oil engines, pumps, etc. In its return for the assessment year 1971-72, the assessee showed a loss of Rs. 32,980. A sum of Rs. 30,000 was received during the accounting year by the assessee on account of rent of the premises, plant and machinery. The ITO refused to treat it as business receipts for computing the loss claimed by the assessee. According to him, this was income from other sources and, therefore, could not be considered for computing the profit or loss of the business. The matter finally reached the Appellate Tribunal. The Tribunal observed as follows :

'We have gone through all these authorities carefully and the ratio decidendi of all these authorities is that in such a case it is a question of fact as to whether the intention of the assessee was to get rid of business altogether or the plant and machinery had been leased out for commercial exploitation thereof. We have also anxiously given our consideration to the lease deed in the present case and after carefully going through the same we are of the opinion that the income in question should be considered as business income and not income from other sources.'

3. The Appellate Tribunal, after examining the facts of the case, held that the assessee had commenced manufacture of oil and diesel engines and the plant and machinery were in full running condition. Further, the assessee had entered into an agreement with a Calcutta company for the sale of the engines and pumps, etc., and it was to comply with this obligation that the plant and machinery had been leased out for a better management, so that the contractual commitment may be fulfilled. According to the Tribunal, it was a case of commercial exploitation and the income from the lease was business income.

4. Clearly, this finding is one of fact based on the material placed before the Appellate Tribunal and, therefore, no question of law as such arose from the order of the Tribunal. We, therefore, decline to answer this question.

5. There shall be no order as to costs.


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