1981 (11) TMI 42

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....f Income-tax under section 263 of the Income-tax Act, 1961 ? " The assessee-firm was carrying on business in the manufacture of machinery parts and was also dealing in hand-tools. Before the commencement of the accounting period relevant to the assessment year 1972-73, the assessee closed its manufacturing and trading activities and leased out the factory premises to the State Warehousing Corporation and received the following amounts by way of rent: Assessment year Amount returned Rs. 1972-73 50,762 1973-74 75,470 The ITO allowed registration to the firm for both the assessment years in question and completed the assessment on the basis that the firm had the status of a registered firm. The Commissioner of Income-tax e....

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....t as such and another way may be that the commercial asset, at a particular time, is found to be more responsive to profit if allowed to be run as such by another as lessee. In either case the owner of the factory carried on the business of earning profits and gains from such an asset.... So long as a business asset is exploited as such and profits or gains are earned from it, the same are profits and gains of a business, however the owner of the commercial asset exploits the same. So when it is said whether he carried on the business himself or not that only means whether he carried on a business activity which may have led to his earning profits or making gains. Once profits or gains are made from the use of the commercial asset itself....