AJIT K.SENGUPTA, J. - (1.) IN this reference under S. 256 (1) of the IT Act, 1961 (' the Act') for the asst. yr. 1972-73, the following question of law has been referred to this Court:- "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was not carrying on any business and, therefore, it status was as an AOP?"
(2.) THE facts are that for the asst. yr. 1972-73 in respect of its previous year ended Dewali 1971 the assessee submitted its return as unregistered firm showing the loss of Rs. 943 reflected in its P&L A/c for the period, under the head 'Profits and gains of business or profession'. In reply to the ITO's query the assessee intimated that there were 9 shops or godowns in the building and 10 residential flats and that it charged the shop owners for their electric consumption at the rate of Rs. 43 per month. The ITO held that the operations carried on by the assessee did not constitute business as, according to him, a notion fundamental to business was trading which the assessee did not carry on. He accepted the loss reflected in the P&L A/c as returned by the assessee, but assessed the same under the head 'Income from other sources'. Observing that the existence of a partnership firm presupposes the existence and carrying on of a business he took the status of the assessee as that of an AOP. The assessee being aggrieved by the said order of the ITO appealed to the AAC. The AAC found that the partners of the assessee-firm had entered into an agreement to carry on business as Estate Agents for land development, acquisition, etc., and held that the correct status of the assessee would be that of an unregistered firm.
(3.) THE Department field dissatisfied and came to the Tribunal. The Tribunal found that the AAC had arrived at the conclusion which he did without giving a finding as to whether the assessee was really carrying on any business. The Tribunal sent that matter back to the AAC for a finding in that regard after pointing out that a decision about the correct status of the assessee hinged on such finding.;