2005 (4) TMI 513

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....ee. The assessee contends that, for that reason, the CIT(A) further erred in not allowing deduction in respect of expenses debited to the profit and loss account, the terminal benefits paid to the employees and the amount paid to the workers under settlement. The assessee is also aggrieved that the CIT(A) erred in not considering the claim of set off of brought forward loss of Rs. 25,18,705 from the assessment year 2000-01 claimed in the computation of total income in the return of income filed on 31st October, 2001. 3. The main controversy, however, hinges on whether or not it was a case of cessation of business. 4. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case as a....

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.... the arecanut business for the assessment year in question. Nevertheless, he was maintaining the establishment and was waiting for improved market conditions in arecanut. It was thus admitted position that no activities were carried out so far as this part of the business was concerned. On these facts, Their Lordships took note of the position that "there is nothing on record to show that he completely abandoned or closed the business forever. On the other hand, his books of account revealed that he was meeting the establishment charges and interest payments as detailed in the accounts in the year of account." It was then observed that the question whether the business is being carried on must depend in each case on its own facts and not on....

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....ried out in the relevant previous year cannot be reason enough to come to the conclusion that the losses incurred by the assessee in that business in the earlier years are not entitled. On the basis of material on record, it could not thus be said, as was the case before the Hon'ble Madras High Court, that the assessee had "completely abandoned or closed the business forever". In our considered view, there is no material to suggest that the cement manufacturing operations of the assessee company were in a stage more than that of suspension. Applying the test laid down by Hon'ble Madras High Court in L. Ve Vairavan Chettiar's case (supra), and in the light of the above factual position, the claim for deduction of expenses could not have been....