TaxTMI 
TaxTMI 
TaxTMI 
1974 (9) TMI 27
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....known as New Bansjora Colliery. The assessee and Messrs. Khas Ganeshpur Coal Mines (P.) Ltd. entered into an agreement dated the 22nd of April, 1959 (annexure "C/2"), to some of the terms of which I shall refer at a proper and appropriate place. By this agreement, Messrs. Khas Ganeshpur Coal Mines (P.) Ltd. (hereinafter referred to as "the managing contractor") was allowed to carry on the coal business of the assessee and to pay to it profit at a certain rate on the amount of coal raised and soft and hard coke manufactured subject to a minimum guaranteed amount. This income which the assessee received from the managing contractor aforesaid was assessed by the Income-tax Officer as income from other sources and not from business. The assesse....
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....hat of letting out. In other words, there was not even a lease executed in favour of the managing contractor. The Tribunal further held that the managing contractor aforesaid was carrying on the colliery business under the effective control and guidance of the assessee, which (control and guidance) militated against any contention that the relationship between them was one of lessor and lessee. On these findings, the Tribunal accepted the contention of the assessee that there was absolutely no question of any transfer either out and out or even by way of lease of the business of the assessee; on the contrary, the assessee was very much carrying on its business through its agent, the managing contractor. The income, thus, according to the Tr....
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....ness through the agent. Strictly speaking, it was needless for me to go into this question since no such question has been sought to be referred by the Commissioner of Income-tax nor has any such question been referred for our determination. It is only on account of the strenuous submissions made by learned standing counsel for the department challenging such a finding of the Tribunal, although in law it was not open to him to so challenge it, I chose to refer to merely some of the salient features of the deed. Not only the deed describes the assessee as being the proprietor of the colliery in question but also the operative portions of the document, some of which I shall presently refer to, do go to support such a description in the preamb....
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....after giving 7 days' notice to the managing contractor. Clause 15 further stipulates that the managing contractor must prepare monthly returns of the coal raised and coke manufactured and despatched from the colliery and must send a copy of the same to the assessee (proprietor) by registered post within the month succeeding. Clause 16 laid down the rate at which payments were to be made to the assessee, such rates being as follows: (i) rupee one and annas eight per ton of coal raised, (ii) rupees two and annas four per ton of soft coke manufactured, (iii) rupees three per ton of hard coke manufactured, etc., with a further stipulation that the assessee shall be entitled to get from the managing contractor a minimum guaranteed amount....
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....he Supreme Court did hold that the lessor in that case was still carrying on business and that income from such letting out could not be said to be anything else than income from business. In the case of Ray Talkies v. Commissioner of Income-tax (Tax Cases Nos. 11, 12, 13 and 14 of 1968), this very Bench, by a judgment dated the 2nd of August, 1973, reviewed a large number of case-law on the point and upheld the contention of the assessee in that case that, where it had let out the commercial assets only for the purpose of earing income, such income was income from business and not from other sources. In one of the cases decided by the Supreme Court, which has been referred to in the aforesaid judgment of this Bench, namely, Commissioner of....
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.... of Shri Lakshmi Silk Mills was referred to in New Savan Sugar's case and accepted as laying down the correct proposition of law but on facts it was distinguished by the Supreme Court in so far as their Lordships in New Savan Sugar's case pointed out that the ratio of the decision was not applicable to that case since in the New Savan Sugar's case, the assessee had intention to part with, and did actually part with, the entire factory and premises for the purpose of earning rental income only and during the subsistance of the lease in question the assessee had never the intention to treat the factory and machinery as a commercial concern. In that context, it was also laid down at page 15: "But this court clearly indicated that no general ....