BEAMS RESEARCH COMPANY PVT LTD,MUMBAI vs. INCOME TAX OFFICER-12(1)(3) (CURRENT JURIDICTION CIRCLE-4(1)(1)), MUMBAI

This appeal is filed by Beams Research Company Private Limited (assessee/appellant) for assessment year 2013 – 14 against the appellate order passed by the National faceless appeal Centre NFAC, Delhi (the learned CIT – A) dated 29/3/2023 wherein the appeal filed by the assessee against the assessment order passed under section 143 (3) of The Income Tax Act, 1961 (the act) by The Income Tax Officer – 12 (1) – 3, Mumbai (the learned AO) was partly allowed.

Assessee is a company engaged in the research activities. It filed its return of income on 29/9/2013 declaring total income of Rs. Nil. The computation of the total income attached with the return of income shows the business loss of ₹ 5,294,539/– and loss from house property of ₹ 1,374,931/– against income of ₹ 3,789,183/– under the head income from other sources. Thus the unabsorbed depreciation of ₹ 2,880,287/– was carried forward. The case of the assessee was selected for scrutiny. Necessary notices under section 143 (2) was issued on 3/9/2014.

During the course of assessment proceedings, the assessee was asked to furnish a detailed note on nature of business activities undertaken during the year and also furnish copy of earlier years assessment orders etc. In response to the above letter, assessee merely stated that the revenue from operation is received from Beams Hospital Private Limited of ₹ 9,639,500/–, no further explanation ,description, modus operandi with supporting were produced as to how this revenue is received from that company was earned. Learned assessing officer on the basis of the information about the address of that party, issued notice under section 133 (6) of the act which

Assessee aggrieved with that preferred an appeal before the learned CIT – A, wherein he upheld the action of the learned assessing officer of treatment of professional receipt of ₹ 9,639,500/– as income chargeable under the head income from other sources. As a consequence to

The assessee is aggrieved with that appellate order and is in appeal before us. The first ground of appeal is with respect to the taxability of ₹ 9,639,500/– as income chargeable under the head income from other sources as determined by the learned assessing officer but treated by assessee as chargeable to tax under the head profits and gains from business or profession. The learned authorized representative submitted a detailed written submission. According to written submission, it appears that assessee is though engaged in the business of research activities, has also purchased 3D laparoscopic machines. Those machines are in fact used by the doctors of Beams Hospitals Private Limited for surgical activities. For the use of machines, which is operated and mainatained by the assessee, each patient was billing is made for 3D laproscopy Machine. He submitted the copies of the bills of those machines in the paper book . He also referred to the memorandum of Association of assessee company to show that the assessee is authorised to carry on the activity of allowing the use of these machines to beams hospitals private limited. He submits that the ownership of the machine rest with the assessee and it has not been let out to that hospital but hospital uses the machine at the premises of the assessee for each patient. He further submitted that assessee incurs the expenditure for the

The learned departmental representative vehemently supported the orders of the lower authorities and submitted that based on the information available on record of past assessment year it is clear-cut that the assessee is not carrying on any of the business. He further submitted that during the course of the assessment proceedings the assessee could not explain the nature of the business carried on by the assessee and therefore the lower authorities are correct in treating the income of the machinery as income from other sources. And consequently the unabsorbed business losses carried forward correctly disallowed.

We have carefully considered the rival contention and perused the orders of the lower authorities. We find that only issue involved in this appeal is whether the income earned by the assessee from Beams Hospitals Private

Ground number 2 of the appeal is consequential in nature for allowance of set-off of current business losses. Accordingly, ground number 2 of the appeal is also allowed subject to the computation of business income of the assessee as per ground number 1.

In the result appeal of the assessee is allowed for statistical purposes.