PHELIX APPLIANCES LTD. Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal") dated July 31, 2013, passed in I.T.A. No. 2536/AHD/2012 for the assessment year 2009-10, the assessee has preferred the present tax appeal with the following proposed questions of law.

(2.) Shri Tej Shah, learned advocate for the appellant-assessee, has vehemently submitted that the Assessing Officer has materially erred in considering Rs. 8,71,279 as business expenditure and set off the claim by the assessee from the income received from the house property. It is submitted that as such the assessee claimed the business loss of Rs. 8,71,279 as set off from the income received from the house property as provided under section 71 of the Act. It is submitted that, therefore, the Assessing Officer has materially erred in not properly appreciating the scope of ambit of section 71 of the Act.

(3.) Heard Shri Tej Shah, learned advocate for the appellant-assessee. At the outset, it is required to be noted that as such there are concurrent findings of fact recorded by the all the authorities below that the assessee incurred the expenditure of Rs. 8,71,279 as claimed and, consequently, the loss suffered by the assessee to the aforesaid extent. There are concurrent findings of fact recorded by all the authorities below that as such the assessee had stopped the manufacturing activity in the factory premises in question and started only trading activity of selling air-conditioners and during the year under consideration sold only three air-conditioners for an amount of Rs. 45,000. It is required to be noted that as such the factory premises in question, in which, the manufacturing activity was earlier carried was given on lease to one Rextone Industries Ltd., Mumbai, and the assessee earned the rental income from the house property of Rs. 22,50,000. That the assessee claimed the benefit under section 24 of the Act with respect to the rental income of Rs. 22,50,000. The assessee also claimed the business loss of Rs. 8,71,279 by submitting that the assessee had incurred the said expenditure while doing the business and claimed that there was business loss of Rs. 8,71,279 and claimed the set off of the said business loss from the rental income from the house property. On appreciation of evidence and considering the factual aspect all the authorities below have not accepted the claim of the assessee that it had incurred expenditure of Rs. 8,71,279 while doing the business and, consequently, there was business loss to the extent of Rs. 8,71,279 and, therefore, did not allow the set off claimed by the assessee from the rental income received from the house property. The aforesaid is discussed in detail by the learned Commissioner of Income-tax (Appeals) in paragraph 3.2 to 3.2.5, which reads as under: