- (1.) THIS appeal under Section 260A of the Income Tax Act is related to the assessment year 1995 -96. The Scientific Instrument Company Ltd., Allahabad -the Appellant has challenged the order of the Income Tax Appellate Tribunal dated 7.5.2004, on the following questions of law: (i) WHETHER, the ITAT was legally correct in holding that income yielded by the office premises No. 82, Sakhar Bhawan (8th Floor), Nariman Point, Bombay should be assessed as income from house property under Section 22 of the Act and that too on the basis of first agreement dated 7.11.1987 which got substituted by another agreement dated 4.11.1988? (ii) WHETHER on the facts and circumstances of the case particularly that the assessment itself was based on second agreement dated 4.11.1988 as had been entered into by the Assessee with a view to obtain the benefit of interest fee deposits for being utilized in its business only, the Tribunal was legally correct in holding that the second agreement should be discarded and the income of the of the Assessee under the head income from house property should be computed with reference to the first agreement dated 7.11.1987? (iii) WHETHER the view taken by the ITAT is not vitiated in law as the same is based on non -appreciation of the relevant facts and circumstances of the case, particularly that the second agreement dated 4.11.1988 had duly been acted upon by the parties in as much as the lessee had provided interest fee deposit of Rs. 2,30,00,000/ - (earlier Rs. 1,07,50,000) with the Assessee? (iv) WHETHER alternatively the Tribunal was legally correct in not setting off from business income of the Assessee, the monetary effect of interest free deposits as had actually been availed by the Assessee in terms of the second agreement dated 4.11.1988?
(2.) THE first question of law framed is the main question, the decision of which will govern the remaining questions. In respect of the assessment years 1989 -90, 1990 -91, 1992 -93 and 1993 -94, the Assessee had challenged the Income Tax Appellate Order in Income Tax Appeals No. 1, 2, 3 and 4 of 2003.
(3.) AFTER hearing the parties we decided the above appeals by our judgment dated 12.8.2011 wherein the first question, which arises in this case also was considered and decided as follows: 12. In the present case, we find that the authorities did not apply the principle laid down in Universal Plast Ltd (Supra) in deciding the issue. Though the Income Tax Appellate Tribunal relied upon Tutocorin Alkali Chemicals and Fertilizers Ltd v. CIT [ : 227 ITR 172 (S.C)], Sultan Brothers Pvt Ltd v. CIT [ : 51 ITR 353 (S.C.)], Commercial Properties Ltd [ : AIR 1928 Cal 456], East India Housing and Land Development Trust Ltd v. CIT. [42 ITR 19 (S.C)], Punjab National Bank Ltd v. CIT [ : 141 ITR 886 (Del)], CIT v. Indian Metal and Metallurgical Corporation [ : 215 ITR 424 (Mad.)], CIT v. Arvindkumar Odhavij [ : 213 ITR 551 (Bom)], and other cases, it did not apply the principle laid down by the Supreme Court in Universal Plat Ltd (Supra) to the facts of the present case. 13. If we apply the tests laid down by the Supreme Court in Universal Plast Ltd, to the facts of the present case, we find that all the assets of the business were not rented out by the Appellant company. It was doing the main business of manufactures, imports, purchases and dealing in scientific apparatus, chemicals, chemical products, articles of glass, metal, wood, paper etc., more or less connected with science, as given Clause 3 (a) of the memorandum of association. Out of the three properties at Mumbai, the property in dispute was being used for its Regional Office. In the interest of the company, it decided to let out one of its properties, to the City Bank, by way of exploitation of business assets, for making profit. The assets were let out, while carrying out other business activities. There was nothing on record, to show that the Appellant had sold away the properties or abandoned its business activities. In the circumstances, in order to exploit business assets, as a prudent business decision, the Appellant took interest free loan from the City Bank, rented out, one of its properties to it, and shifted its Regional Office. In this commercial venture, the Appellant received a higher income regularly from its commercial assets. 14. On the aforesaid discussion, the substantial question framed is decided in favour of the Assessee and against the Revenue. The order of the Tribunal is set aside. The Tribunal will proceed to decide the matter in accordance with law, and in the light of the observations made in the judgment. 15. The Income Tax appeals are allowed.;