Law:

Section:

Section 28(i) read with section 256 of the Income-tax Act, 1961 - Business income - Chargeable as - Assessment year 1971-72 - Assessee, a manufacturer of oil engines and pumps, etc., leased out plant and machinery to another manufacturer - Tribunal found that assessee had entered into agreement with another company for sale of engines and pumps, etc. and it was to comply with that obligation, plant and machinery had been leased out for a better management - Accordingly, Tribunal held that it was a case of commercial exploitation and income from lease was assessee's business income - Whether finding of Tribunal was finding of fact based on material placed before it and, therefore, no question of law arose from it - Held, yes FACTS The assessee carried on the business of manufacture of oil engines and pumps, etc., for agricultural use. It ran into loss and, consequently, leased out the plant and machinery to another manufacturer. The lessee continued the manufacture of oil engines, pumps, etc. In its return, the assessee showed a loss of Rs. 32,980. A sum of Rs. 30,000 was received during the accounting year by the assessee on account of rent of the premises, plant and machinery. The ITO refused to treat it as business receipts for computing the loss claimed by the assessee. According to him, this was income from other sources and, therefore, could not be considered for computing the profit or loss of the business. On appeal, the Tribunal, held that the plant and machinery were in full running condition, and that the assessee had entered into an agreement with another company for the sale of the engines and pumps, etc., and it was to comply with this obligation that the plant and machinery had been leased out for a better management, so that the contractual commitment might be fulfilled. Accordingly, the Tribunal held that it was a case of commercial exploitation of plant and machinery and the income from the lease thereof was business income. On reference : HELD Clearly, the finding of Tribunal was one of fact based on the material placed before it and, therefore, no question of law as such arose from the order of the Tribunal. The High Court, therefore,…

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