- (1.) ON an application under Section 256(2) of the IT Act, 1961, this Court has directed the Tribunal to refer the following question for our opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the income of the assessee is assessable under Section 28 of the Act, 1961?"
(2.) THE assessment years involved in this question are from 1973-74 to 1976-77. THE background of this case is that a mill, which was leased out in asst. yr. 1972-73 at one time was known as John Mills and belonged to family concern known as A. John & Co., who sold the same to a company known as Agra United Mills Co. Ltd. In part consideration of the sale price, the company issued debentures and these debentures were purchased by various persons. One of the debenture-holders was this assessee i.e., Gambhir Mal Pandey, who subsequently formed a company and transferred the debentures to the company so formed. THEse debentures represented l/5th of the entire debentures issued by the company. Somebody filed the suit in the year 1940 for the partition of the properties of the mill in question. THE final decree was passed on 16th July, 1964. THE assessee-company was allotted a portion known as Mill No. 3. This consisted of Spinning Mill, 5 bungalows, labour quarters and Godown, etc. No activity of manufacturing was carried out through that mill by the assessee since 16th July, 1964, instead that mill was given on lease to the family concern. As the suit was pending since 1949, a receiver was appointed, but that receiver was discharged on 28th Aug., 1974. The case of the assessee is that assessee never handed over the possession of the mill and possession of the mill is continued with the assessee, but after giving the mill on lease to M/s Sumer Cotton Mills, received Rs. 30,000 as lease money, therefore, this income of lease money should be treated as income from the business. Ao negatived the claim of the assessee. According to him, lease money received from M/s Sumer Cotton Mills falls under the head "Income from other sources" and not "Business income". In appeal before the AAC, the AAC reversed the view taken by the ITO holding that lease money be assessed as income from business under Section 28 of the IT Act, 1961. In appeal before the Tribunal, Tribunal has also confirmed the view taken by the AAC. Heard Mr. Singhi, learned counsel for the Revenue. None appeared for the assessee, though the matter was listed 2-3 times.
(3.) MR.Singhi, learned counsel for the Revenue, has supported the view taken by the AO. He submits that no whereabouts of the assessee is available, The fact found by the AO reveals that assessee gave the mill on lease and no manufacturing activities or other business activities were carried out during the relevant assessment years. When no business activities have been carried out by the assessee pertaining to manufacturing and assessee simply has given the mill on lease, which is not the business of the assessee, therefore, any amount received on account of lease, that cannot be treated as income from business, ITO has rightly taxed that income or receipt under the head "Income from other sources". It is also pertinent to note that till today, the assessee has never taken back the mill for manufacturing activities. On the facts of this case, it appears that Tribunal has committed error in directing the assessing authority to tax the receipt of the lease amount under the head "Business income". In the result, we answer the question in negative i.e., in favour of the Revenue and against assessee. Reference so made stands disposed of accordingly. ;