Itxa/2810/2010 Of The Commissioner Of Income Tax -7 Mumbai v. Niyati Industries Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.2810 OF 2010 The Commissioner of Income Tax-7, MumbaiV/s.M/s.Niyati Industries Limited ....Appellant ....Respondent Mr.Suresh Kumar for the Appellant. Ms.Aasifa Khan i/b Aasifa Khan & A.J. Patil for the Respondent. CORAM : S.J. VAZIFDAR AND M.S. SANKLECHA, JJ.DATE : 17TH SEPTEMBER, 2012. P.C. :- 1.This is an appeal under section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal (Tribunal) dated 26.10.2009 in ITA No.5040/Mum/2008 pertaining to the assessment year 1999-2000. 2.The appellant seeks to raise the following questions of law :- “i)Whether on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal was justified in treating the activities of financing by way of lease and hire purchase as one arm of the business of granting loans and advances ?case and in law, the Income Tax Appellate Tribunal was justified in treating the activities of financing by way of lease and hire purchase as one arm of the business of granting loans and advances ? ii)Whether on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal was justified in directing the AO to treat the loss of Rs.50,26,575/- as business loss ?”case and in law, the Income Tax Appellate Tribunal was justified in directing the AO to treat the loss of Rs.50,26,575/- as business loss ?” 3.The Commissioner of Income Tax (Appeals) held that each of the investments are made in assets which are leased out and that the assessee's main business is leasing of plant and machinery and not lending money i.e. loans and advances. The Tribunal in paragraph 9 of the order observed that the CIT (A) had found that the main business of the assessee has been to provide finance by way of straight loans or lease and hire purchase. 4.Ms.Khan, the learned counsel appearing on behalf of the assessee submits that the assessee is entitled to succeed irrespective of whether the income was from straight loans or from leasing and hire purchase agreements, as according to her, they were financial leases. She however, submits that in any event the assessee was in the business of providing loans and advances i.e. straight loans and not merely financial leases. The order of the CIT (A) while noting the application of funds, observed that the current assets were of the value of Rs.4,78,49,259/-. There is however, no break up of this amount. She contended however that the evidence was already on record before the AO and the Appellate Authorities which would establish the assessee's case. 5.We do not consider it appropriate to examine the records before the authorities. This must be left to the Tribunal. 6.The appeal is therefore, disposed of by the following order :- i)The order of the Tribunal is set-aside. The Tribunal is requested to pass a fresh order after affording the respondent an opportunity of establishing the application of funds, as contended. Needless to add that all the contentions of the parties are kept open.No order as to costs. (M.S. SANKLECHA, J.) (S.J. VAZIFDAR, J.)