ALCHEMIE INDUSTRIES,MUMBAI vs. I.T.O. WD. 23(2)(1), MUMBAI

The present appeal has been preferred by the assessee against the order dated 19.06.2012 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2006-07.

The short facts of the case are that the assessee is a partnership firm having a factory premise at Sarigam, Valsad. Assessee firm is engaged in business of manufacturing of chemicals, dyes, intermediates. However, during the year under consideration, the assessee company has leased out this factory on rent for 2 M/s. Alchemie Industries Rs.6,00,000/- and assessee has claimed this income as business income and claimed the depreciation of Rs.3,08,689/-. The AO did not verify the expenses but treated lease rent of Rs.6,00,000/- as rent. Similarly, the firm has also received interest of Rs.4,48,288/- from Aarti Industries Ltd. and it was also treated as income from other sources.

During the course of hearing, the Ld. A.R. pointed out that the assessee has submitted the agreement wherein it was agreed between assessee and assignee company that all expenses for upkeep of plant were to be borne by the assignee company during the period of agreement. All personnel employed by the assessee firm were retained on the roll of assessee firm. Therefore, all the details were not verified by the AO. He submitted that in respect of the interest income AO has not verified the books of account, therefore, matter may be restored.

Ld. D.R. relied upon the orders of the Revenue authorities. 5. Having heard both the parties, we are of the view that it requires verification at the end of AO. Therefore, we restore this issue to the file of the AO to decide the matter afresh, as per law. 6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 26.10.2017.