IN INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER ITA No. 436/JP/2016 Assessment Year : 2010-11 Deputy Commissioner of cuke M/s Golcha Minerals Pvt. Ltd., Income Tax, Vs. Golcha Trade Centre, M.I. Circle-2, Jaipur. Road, Jaipur. PAN/GIR No.: AACCG 6614 R Appellant Respondent Revenue by : Shri R.A. Verma (Addl. CIT) Assessee by : None Date of Hearing : 18/10/2016 Date of Pronouncement : 19/10/2016 ORDER PER: BHAGCHAND, A.M. This is appeal filed by revenue against order dated 25/01/2016 passed by ld CIT(A), Aligarh at Jaipur (Camp Office) for A.Y. 2010-11. 2. brief facts of case are that return of income for year under consideration was filed on 06/10/2010 declaring total income of Rs. 2 ITA 436/JP/2016_ DCIT Vs M/s Golcha Minerals Pvt. Ltd. 13,75,029/-. assessment was finalized U/s 143(3) of Income Tax Act, 1961 (in short Act) on 12/03/2013 at income of Rs.42,60,440/-. 3. assessee filed appeal before ld. CIT(A), who has allowed appeal of assessee, against which, revenue is in appeal before me. 4. This case was posed for hearing on 01/9/2016, on which Shri A.B. Dangyach attended and requested for adjournment. same was granted for 18/10/2016. On 18/10/2016, none attended on behalf of assessee. Ld. DR was heard. After considering pleadings of revenue and material available on record, this appeal is being adjudicated. In this appeal, revenue has taken following grounds of appeal: 1. Whether on facts and in circumstances of case and in law ld. CIT(A) has erred in holding income of Rs. 60,00,000/- as income from business as against income from other sources assessed by assessing officer. 2. Whether on facts and in circumstances of case and in law ld. CIT(A) has erred in deleting addition of Rs. 4,82,593/- made by AO on account of disallowance of environment expenses. 3. Whether on facts and in circumstances of case and in law ld. CIT(A) has erred in deleting addition of Rs. 3,35,268/- made by AO account of disallowance of dead rent expenses. 4. Whether on facts and in circumstances of case and in law ld. CIT(A) has erred in deleting addition of 3 ITA 436/JP/2016_ DCIT Vs M/s Golcha Minerals Pvt. Ltd. Rs. 17,99,281/- made by AO account of disallowance of bonus expenses . 5. In ground No. 1 of appeal, revenue has challenged issue of holding income of Rs. 60,00,000/- as income from business as against income from other sources assessed by Assessing Officer. As per Assessing Officer s observation, assessee company was engaged in business of mining/trading of soap stone crude and manufacturing, trading of soapstone powder, which are used for production of cosmetics, pharmaceuticals, paper, rubber, soaps etc. It was also noted by Assessing Officer that company was granted mining leases by Government of Rajasthan for excavation and manufacturing of different grades of soapstone and lumps. Assessing Officer also found that for year under consideration, assessee company has not carried out any business activity as is evident from P&L account. only income shown in P&L account was rental receipt for leasing out its pulverizer to M/s U.M.D.S.P. Ltd.. assessee claimed that, it has business income for reason that business was closed for temporary lull and machinery was let out, which was incidental to business of assessee. Assessing Officer after providing opportunity to assessee by issuing notices, assessed income as income from other sources. relevant paragraphs of Assessing Officer is reproduced as under:- 4 ITA 436/JP/2016_ DCIT Vs M/s Golcha Minerals Pvt. Ltd. 2.4 submissions of assessee are not found acceptable because of following reasons:- (a) No business activity was carried on by assessee during year under consideration and when income is not earned in course of business. Secondly, assessee is not engaged in business of letting out of plant and machinery. Therefore, it cannot be assessed under head "business income". (b) income from business and profession is being dealt with in section 28 of I.T. Act and case of assessee is not found covered in definition given in sec. 28. (c) case of assessee is neither covered under "income from business or profession" nor "income from house property". Section 22 is confined to buildings or lands appurtenant thereto which may be conveniently called "house property" and in this case asset of assessee cannot be categorized as "house property . (d) income of assessee is to be assessed under one following heads. - Income from business or profession, - Income from house property or - Income from other sources. Incomes under first two heads are specifically defined and if income is not covered under first 5 ITA 436/JP/2016_ DCIT Vs M/s Golcha Minerals Pvt. Ltd. two head, then it is to be assessed under income from other sources. e) Hon'ble Delhi High Court in case of CIT vs K.Narendra (2000) ITR 579 had upheld that "as assessee was not carrying on any business activity and had only let out notary press on rental basis, lease money obtained by him was assessable as income from other sources. g) Section 56 is residual head in which income not falling in other heads are brought to tax. h) Since, income received by assessee is not covered under section 22 or 28 it is to be assessed u/s 56 of I.T. Act. 2.5 Therefore, keeping in view above facts, it is held that income earned by assessee from lease rent is assessable under head "income from other sources". Similarly, income received from interest, dividend, sundry balances written off and prior period adjustments is also heated as income from other sources. Hence, total income of Rs 62,05,761/- declared by assessee is treated as income from "other sources". Further Assessing Officer did not allow various expenses claimed by assessee as expenses from income assessed under head 6 ITA 436/JP/2016_ DCIT Vs M/s Golcha Minerals Pvt. Ltd. income from other sources can be allowed as per provisions of Section 57(iii) of Act. 6. After hearing revenue and from perusal of records available, it is noticed that there is nothing on record, which suggests that business was closed due to temporary lull. Since pulverizer was leased out to M/s U.M.D.S.P. Ltd. for same purpose, which assessee was doing from same machinery. Therefore, it is not established that there was temporary lull in business. Further, it is also not clear from record for what period this pulverizer was leased out to M/s U.M.D.S.P. Ltd. Whether lease was only for year under consideration or for longer period. Further, what was status in subsequent years. crucial facts regarding temporary lull in business are not available on record. period of lease is also not known from records available. Considering all these facts, I find it appropriate that in interest of justice and equity to restore issue to file of ld. CIT(A). Accordingly, this ground of appeal is allowed for statistical purposes only. 7. Grounds No. 2 to 4 of revenue s appeal are against deleting additions of various expenses disallowed by Assessing Officer. Since, these issues can be decided only when character of rental income of Rs. 60,00,000/- received on account of leasing out pulverizer to M/s 7 ITA 436/JP/2016_ DCIT Vs M/s Golcha Minerals Pvt. Ltd. U.M.D.S.P. Ltd. is decided, I have already restored back issue to file of ld. CIT(A). Therefore, these grounds are also restored back to file of ld. CIT(A) for deciding issues de novo. 8. In result, appeal of revenue is allowed for statistical purposes only. Order pronounced in open court on 19/10/2016. Sd/- BHAGCHAND) Accountant Member Jaipur Dated:- 19th October, 2016 Copy of order forwarded to: 1. Appellant- DCIT, Circle-2, Jaipur. 2. Respondent- M/s Golcha Minerals Pvt. Ltd., Jaipur. 3. CIT 4. CIT(A) 5. DR, ITAT, Jaipur 6. Guard File (ITA No. 436/JP/2016) By order, Asst. Registrar Deputy Commissioner of Income Tax, Circle-2, Jaipur v. M/s Golcha Minerals Pvt. Ltd