TaxTMI 
TaxTMI 
2010 (3) TMI 1227
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....learned counsel submitted that the assessee-company was engaged in printing job in Times of India and other newspapers on behalf of Bennett Coleman Co. Ltd. During the year under consideration, the assessee had incurred loss of Rs. 22,31,246/-. He submitted that the accounts of the assessee are audited. All the bills/vouchers along with complete details of expenses and books of account were duly produced during assessment proceeding, wherein no specific defect could be pointed out by the A.O. or there is no finding that any particular expenditure was not related to assessee's business. The A.O., however, on mere surmises and conjectures disallowed the entire business loss on the ground that there was no business activity during the year....
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....greement for such printing job was cancelled and to survive as well as to meet up the financial crisis, the assessee exploited commercial assets by letting them out on rent. As is evident from P/L Account, the assessee also earned in addition to rental income, income from service charge/commission. The A.O. in his assessment order has not pointed out any irregularity in maintaining the books of account or to indicate any expenditure which was, according to him, not related to business expenditure. He disallowed the loss claimed by the assessee only on the ground that the assessee had no business activity during the year under consideration. On the above facts, the Ld. C.I.T.(A) allowed the business loss claimed by the assessee by holding as....
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....i Rajah vs. CIT [71 ITR 504] and K. Sreedharan & Co. vs. CIT [202 ITR 796]. It has been held in the following cases that if a business remains in temporary lull or if its activities are kept under suspension temporarily, the business cannot be considered to have been closed or discontinued. The period of temporary lull of the business is thus required to be treated as its continuation. i) Lakshmi Narayana Board Mills Pr. Ltd. [205 ITR 88 (Cal)at 91-92] ii) Vikram Cotton Mills Ltd. 169 ITR 597 (SC) iii) CIT vs. United Collieries [49 Taxman 227 (Cal)]. The same analogy would hold good in respect of the r....
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....n the business. Moreover, as rightly held by the C.I.T.(A), the A.O. could not bring on record any evidence to establish that the assessee had intention to close down the business or it has already closed down its business activities. Therefore, simply on the reason that there was temporary cessation of business, the A.O. was not justified in disallowing the loss incurred by the assessee. In this view of the matter, we uphold the order of the Ld. C.I.T.(A) on this issue and this ground of the revenue is rejected. 4. The next ground of the Revenue is against direction of C.I.T.(A) to treat the interest income of Rs. 32,676/- as business income as against income from other sources taken by the A.O. The assessee in its P/L Account had shown....
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....ets. The funds utilized in making fixed deposits with banks were business funds lying temporarily surplus with the assessee. It was, therefore, assessable as business income and revenue expenditure could be deducted from it." The ratio of the above decision would be squarely applicable to the case of the assessee because the facts are identical. It has been stated by the assessee's counsel that interest has been earned on the utilization of commercial assets which were lying in the form of surplus fund. The above factual assertion has not been controverted by the Revenue. In view of the above, we respectfully following the decision of Hon'ble jurisdictional High Court uphold the order of the C.I.T.(A) directing the A.O. to assess....
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.....(A) in treating the following receipts as business income :- i) Rental income Rs. 1,75,000 ii) Liabilities written back Rs. 49,144 iii) Service charges Rs. 8,40,000 6.1. We have heard the parties and perused the material placed before us. While dealing ground No.1 above, we have already held that the assessee during temporary lull in the business has earned income by exploiting its commercial assets and as per law as discussed above the same is to be treated as business's income. The Ld. C.I.T.(A) following the decision in the case of CIT vs. Katihar Jute Mills (P) Ltd. [116 ITR 781 Cal)] directed the A.O. to treat the service charges of Rs. 8,40,000/- as assessee's business income. Similarly in the case of rental incom....