AI Drafter 
TaxTMI 
TaxTMI 
2001 (8) TMI 290
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.... premises and the inaction of the assessee in this regard, arising out of its special relationship with the sick company, amounts to allowing the said company free tenancy and as such the provisions of rule 4(b) are not satisfied and consequently the deduction as contemplated under section 24(1)(x) of the Income-tax Act, is not available to the assessee; 4. The Hon'ble CIT(Appeals) failed to appreciate and take note of the special relationship between the partners of the assessee-firm and the promoters of the company; and 5 ...... 3. The Assessing Officer mentioned that the assessee-company let out one of its properties to M/s. Sri Rayalaseema Paper Mills (hereinafter referred to as 'SRPM' for brevity) and it has been declaring income from the said property. For the assessment year 1989-90, the rental income disclosed was of the order of Rs. 82,755. However, no such income was disclosed for the three assessment years under appeal before us. It was explained before the Assessing Officer that the said SRPM became a sick unit and has been referred to the Board for Industrial and Financial Reconstruction (hereinafter referred to as 'BIFR' for brevity) in the year 1989-90. It w....
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....nbsp; 780 ----------- 81,975 &n....
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....sp; 72,000 Add: Municipal Taxes debited to P&L A/c. 780 but already considered in the above computation. ----------- &n....
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....ring the company to be a sick Industrial Company. This was a mistake apparent from record as the appellant-firm at the time of hearing filed a paper book which contains a certificate passed by the Board under section 3(1)(c) of the Act holding the company to be a sick industrial company within the meaning of that provision as the conditions laid down therein are satisfied. The mistake apparent from record has been brought to my notice by the appellant-firm by petition for rectification under section 154 of the Income-tax Act dated 29-3-1996. I am satisfied that it is a case of mistake apparent from record. I, therefore, direct the Assessing Officer to allow benefit for deduction under section 24(1)(x) of the Income-tax Act as the company has been declared to be a sick industrial unit by the Board for Industrial and Financial Reconstruction. In the result, all the three appeals are allowed." Aggrieved by the above order of the CIT(A), Revenue preferred these appeals before this Tribunal. 5. When the appeals were posted for hearing on 14-5-2001, the notice of hearing sent to the assessee was returned by the postal authorities unserved. Hence, the appeals were adjourned to 4-7-2....
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....e observed that in terms of Rule 4(b), the deduction under section 24(1)(x) is available only if the defaulting tenant has vacated the premises or steps have been taken to compel him to vacate the property. Under Rule 4(d), the assessee is also required to take all reasonable steps to institute legal proceedings for the recovery of unpaid rent, or in the alternative, satisfy the Assessing Officer that legal proceedings would be useless. We do not see how these conditions are satisfied by the assessee in the present case. The CIT(A) has simply mentioned that the BIFR passed an order declaring the assessee to be a sick industrial company. A copy of this order is not available with us and it must have been filed before the CIT(A). What follows from such an order passed by the BIFR is not spelt out by the CIT(A). 7. Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, which deals with 'suspension of legal proceedings, contracts, etc.' reads as under - "22. (1) Where in respect of an industrial company, an inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation for consideration or a sanctioned scheme is under i....