This is appeal filed by assessee and is directed against order dt. 19th July, 2005 passed by CIT(A) for asst. yr. 2001-02. main grievance raised in this appeal is that CIT(A) erred in holding that there was cessation of business of assessee. assessee contends that, for that reason, CIT(A) further erred in not allowing deduction in respect of expenses debited to P&L a/c, terminal benefits paid to employees and amount paid to workers under settlement. assessee is also aggrieved that CIT(A) erred in not considering claim of set off of brought forward loss of Rs. 25,18,705 from asst. yr. 2000-01 claimed in computation of total income in return of income filed on 31st Oct., 2001. main controversy, however, hinges on whether or not it was case of cessation of business. We have heard rival contentions, perused material on record and duly considered factual matrix of case as also applicable legal position. On careful perusal of orders of authorities below, we are unable t o find any material to suggest, leave aside establish, cessation of business. There is no doubt finding that no activities were carried out but then such finding by itself does not mean or imply that it is case of cessation of business. We find that whole cause of action of disallowance of loss carried forward arose in background of AO s noting that "the assessee-company had not carried out any business activity during this year" which at best was AO s finding about activity of business not being functional in relevant previous year and, in our opinion, takes unsustainbly narrow view of scope of cessation of business. AO has declined set off of losses only on basis that manufacturing activity in assessee s plant was not carried out in relevant previous year. In our considered view, plant not working during year per se cannot even lead to conclusion that business of cement manufacturing was discontinued, leave aside question of closure of assessee s business. In case of L. Ve. Vairavan Chettiar vs. CIT (1969) 72 ITR 114 (Mad), their Lordships of Hon ble Madras High Court were in seisin of situation where assessee had obtained import licence for doing arecanut business but due to adverse conditions in market he temporarily suspended arecanut business for assessment year in question. Nevertheless, he was maintaining establishment and was waiting for improved market conditions in arecanut. It was thus admitted position that no activities were carried out so far as this part of business was concerned. On these facts, their Lordships took note of position that "there is nothing on record to show that he completely abandoned or closed business forever. On other hand, his books of account revealed that he was meeting establishment charges and interest payments as detailed in accounts in year of account." It was then observed that question whether business is being carried on must depend in each case on its own facts and not on any general theory of law, their Lordships then referred to, with approval, Lord Summer s observation in IRC vs. South Behar Railway Co. Ltd. (1925) 12 Tax Cas. 657 that "Business is not confined to being busy; in many businesses long intervals of inactivity occur. . . . . concern is still going concern though very quite one." After elaborate survey of judicial precedents on issue. Their Lordships concluded, in light of, as noted above factual position that "There is nothing on record to show that he completely abandoned or closed business forever. On other hand, his books of account revealed that he was meeting establishment charges and interest payments as detailed in accounts in year of account", that loss in arecanut business, in which admittedly no activity was carried out during relevant previous year, was to be set off against assessee s business income in year. As ratio of aforesaid judgment is summed up in ITR headnotes at p. 115 of report, "As assessee was maintaining establishment and waiting for improved market conditions in arecanuts and there was nothing to show that he completely abandoned or closed business forever, business must be deemed to be continuing." In light of this legal position it would follow that unless there is some material on record to show that assessee has completely abandoned business, merely because no core business activities were carried out in relevant previous year cannot be reason enough to come to conclusion that losses incurred by assessee in that business in earlier years are not entitled. On basis of material on record, it could not thus be said, as was case before Hon ble Madras High Court, that assessee had "completely abandoned or closed business forever". In our considered view, there is no material to suggest that cement manufacturing operations of assessee-company were in stage more than that of suspension. Applying test laid down by Hon ble Madras High Court in L. Ve Vairavan Chettiar s case (supra), and in light of above factual position, claim for deduction of expenses could not have been declined on ground that business of assessee was not continuing in relevant previous year. As evident from nature of expenses debited in P&L a/c, copy of which was placed before us at p. 4 of compilation of papers, unambiguously shows that even business activities were carried out in relevant previous year. Keeping all these factors in mind, as also entirety of case, we are of considered opinion that CIT(A) was indeed not justified in holding that there was cessation of business. assessee s above grievance is, therefore, quite justified, and we uphold same. As regards claim for admissibility of certain deductions and set off, we find that none of authorities below have dealt with these issues by way of speaking order. There is no discussion about deduction in respect of expenses debited to P&L a/c, terminal benefits paid to employees and amount paid to workers under settlement. claim of set off of brought forward loss of Rs. 25,18,705 from asst. yr. 2000-01 has also not been considered. Having heard rival contentions on same, and having perused material on record, we are of considered view that these issues are required to be restored to file of AO. We order accordingly. AO shall adjudicate upon question of deductibility of these deductions and admissibility of set off of brought forward loss of Rs. 25,18,705 from asst. yr. 2000-01, in accordance with law, by way of speaking order, and after giving due and fair opportunity of hearing to assessee. While doing so, AO shall also bear in mind our observations regarding lack of material to come to conclusion that there was cessation of business. matter thus stands restored to file of AO, with our directions as above. appeal is allowed for statistical purposes. *** CHUNILAL & CO. (TM)(P) LTD. v. INCOME TAX OFFICER