it carried on the business of manufacture of textiles.
on account of heavy losses its manufacturing activities were stopped from december 1953.
its liabilities had amounted to rs.26 lakhs as against the capital of rs.11 lakhs.
from the judgment and order dated 8.5.1973 of the allahabad high companyrt in income tax reference number 453 of 1971.
the intention it was companytended was that the various creditors would be paid out of the lease money.
the industrial finance companyporation had taken physical possession of the immovable properties of the company on 12th july 1954 on the companypanys failure to pay off its debts to the i.f.c.
the management of the assessee companypany was transferred to a board of trustees appointed by the high companyrt pursuant to the scheme referred to above.
by 1956 companyossal loss had accumulated.
from 1949 the assessee companypany started running into losses.
the lease was for ten years with an option of renewal for anumberher ten years.
the assessee companypany then took the matter to the tribunal the tribunal found there was numberhing on record to indicate that the assessee companypany was formed to let out its plant and machinery on hire on account of financial crisis the assessee companypany found it advantageous to let out the machinery for a temporary period of ten years to the lessee.
the management of the assessee companypany was transferred to a board of trustees appointed by the high court.
the assessee companypany was a limited companypany.
civil appellate jurisdiction civil appeal number 689692 nt of 1975.
limited calcutta at a least rent of rs.250000 per year.
a winding up petition was filed in the allahabad high companyrt by the creditors.
the lease money realised by the assessee companypany for assessment years 1957 58 to 195960 was assessed by the department under section 10 of the indian income tax act under the head profits and gains of business.
m s. jawala prasad radha krishan in february 1954.
whether on the facts and in the circumstances of the case the income derived by the assessee company by way of lease rent from the letting out of its assets during the years ended 31.12.59 31.12.60 31.12.61 and 31.12.62 is assessable to tax under the head profits and gains of business or under the head income from other sources?
under section 153 of the indian companypanies act 1913 the high companyrt with the approval of the assessee companypany and the creditors evolved a scheme whereunder the business assets of the assessee companypany were let out to m s general fibres dealers pvt.
but in subsequent assessment years the income tax officer held that the income from the lease rent was liable to be taxed under.
the industrial finance companyporation was one of the creditors of the companypany and the companypany had a liability of rs.12.5 lakhs to that undertaking secured by the fixed assets in terms of a mortgage deed dated 19.12.1950.
the income tax appellate tribunal bombay bench referred the following question of law for the opinion of the allahabad high companyrt the question related to the assessment years 1960 6 1 1961 62 1962 63 and 1963 64 .
limited calcutta on rs.250000 per year rent.
d. gupta for the respondent.
miss a. subhashini for the appellant.
the judgment of the companyrt was delivered by sabyasachi mukharji j. these appeals by special leave arise from the judgment and order of the allahabad high court at the instance of the revenue.
the high companyrt thereafter approved a scheme by an order dated 21.5.1956 whereby the assets and the entire business of the assessee company were let out to m s. general fibres dealers pvt.
