CIT, FARIDABAD vs. M/S DELHI FARIDABAD TEXTILES (P) LTD.

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITA No.885 of 2008 Date of decision 22 .2.2010 Commissioner of Income Tax ... Appellant Versus M/s Delhi Faridabad Textiles Pvt. Ltd. ... Respondent. CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE JITENDRA CHAUHAN Present: Ms. Urvashi Dhugga ,Advocate for the appellant. 1.To be referred to the Reporter or not ? 2.Whether the judgement should be reported in the Digest ? M.M.KUMAR, J. The Revenue has approached this Court under Section 260 A of the Income Tax Act, 1961 (for brevity 'the Act') by filing the instant appeal challenging order dated 8.2.2008 (A.3) passed by the Income Tax Appellate Tribunal, Delhi Bench, Delhi (for brevity 'the Tribunal') in ITA No. 3832 (Delhi)/2003 in respect of assessment year 1985-86. The aforesaid order is common order which has also been passed by the Tribunal in penalty proceedings in the case of the same assessee in ITA No. 1537 (Delhi)/2006 for the assessment year 1985-86. Therefore, both the appeals bearing ITA No. 885 and 964 of 2008 are being disposed of by a common order.

The assessee- respondent had been maintaining common books of account, bank accounts and common funds. It continued to be managed by the same management. The workers and premises also continued to be the same. Accordingly the findings of the Assessing Officer on the aforesaid issue were not reversed by the CIT(A). Even the Tribunal approved those findings. Thus the categorical finding is that the business of the assessee- respondent remained the same. The test for determining the nature of the business is whether the company continued under the same management, employed the same funds and used the same workers. The test is not what item the assessee has produced or in which item he has been dealing. Holding that community of funds, management and the work force is the key test to decide whether the assessee continued to do the same business or not, the Tribunal has held that the assessee- respondent would not be entitled to set off the losses of textile business against the chemical business within the prescribed time limit. Accordingly the matter has been remanded back with a direction to the Assessing Officer to verify whether the losses claimed pertained to eight years as mentioned in Section 72(3) of the Act and allow the losses accordingly. Moreover, the matter has been merely remanded back to the Assessing Officer. Therefore, we find that no question of law much less a substantive question of law would arise for determination of this Court. The appeals are without merit and the same are accordingly dismissed. A copy of this order be placed on the file of connected appeal. (M.M.Kumar) Judge (Jitendra Chauhan) 22.2.2010 Judge okg