CIT Vs. RAJASTHAN MIRROR MFG. CO.

JUDGEMENT

(1.) BY the Court On an application filed under section 256(1) of the Income Tax Act, 1961, the Tribunal has referred the following question for the opinion of this court :

(2.) THE assessee is a firm which was carrying on business of manufacture and sale of wind screen glass for automobiles and toughened glass. The business and the factory was leased out to Auto Glass Industries which lease was also terminated in the accounting year relevant to assessment year 1979 -80. The relevant assessment year in hand is 1980 -81. For the year under review there was no manufacturing operation at all. The assessee had entered into financial arrangement with Rajasthan Financial Corporation (RFC) by means of a mortgage deed dated 3 -6 -1971, and received a sum of Rs. 4,60,000 as loan. The property which was mortgaged includes land and the factory building and also various machineries.

(3.) IN appeal before the Commissioner (Appeals), the Commissioner (Appeals) has observed that there was no actual transfer, therefore, there is no question of charging profit under section 41(2) or the capital gains. The view taken by the Commissioner (Appeals) has been upheld by the Tribunal.