Dipak Kumar Sen, J. - (1.) This reference arises out of reassessments made on National Sound Studio (Private) Ltd., Calcutta, under Section 147 of the I.T. Act, 1961, in respect of assessment years 1962-63 and 1963-64, the relevant previous years being the financial years ending, respectively, on the 31st March, 1962, and 31st March, 1963.
(2.) The facts found and/or admitted in the proceedings are shortly as follows :
(3.) At the material time, the assessee, who had long discontinued its original business of production of films had let out its studio building without any plant or machinery on rental basis to several tenants. Such rental income accruing to the assessee in the assessment years 1962-63 and 1963-64 was assessed to income-tax under the head "Business". A succeeding ITO found later that the said rental should have been assessed under the head "Income from house properties." Accordingly, he decided to reopen the assessments under Section 147(b) of the I.T. Act, 1961, and recorded the following reasons for such reopening : "Perused records. The assessee took lease of a plot of land and erected building on it. At first the lease was taken for 15 years which expired in April, 1960. Thereafter, in August, 1960, the lease was renewed for a longer period. In the building constructed by the assessee, a studio was set up and the assessee started to do business as a studio owner and producer of motion pictures. The business of production of films was short lived but the assessee continued to do the business of a studio owner. After some time this business also closed down and the assessee let out the studio with its plant and machineries to one Sri M.D. Chatterjee on rental basis. In 1960, M.D. Chatterjee left the tenancy and the assessee sold out all its plant and machinery (assessment year 1961-62). Thus, in the assessment year 1961-62, assessee's business was fully dissolved. Thereafter, the assessee let out the building erected by him (from time to time more additions were made to the original building) to several tenants on monthly rent as the owner of the building. As decided in the case of Ballygunge Bank Ltd. v. CIT [1946] 14 ITR 409 (Cal) assessee's income from the building should have been assessed under the head ' Income from house properties '. But the assessment for the years 1962-63 to 1964-65, which have already been completed, have been made as if the assessee was still carrying on the business as a studio owner. The result of the assessment has been that the assessee had been under-assessed. The assessee, however, is not responsible for this under-assessment. Hence, it is necessary in this case to take action under Section 147(b) to assess the correct amount of income under the head 'House properties'. Issue notice under Section 148, calling for returns for the years 1962-63, 1963-64 and 1964-65.";