Commissioner of Income Tax vs Capoor''s Hotel Bar and Restaurant (P.) Ltd.

This is a reference u/s 256(2) of the Income Tax Act, 1961. The Tribunal has stated the following question :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in excluding the income from the business of hotel, bar and restaurant for the period from June 2, 1968, to December 31, 1968, from the hotel income of the assessee ?"

For the assessment year 1969-70, a return was filed by the assessee, but income derived from the hotel business including bar and restaurant for the period from June 2, 1968, to December 31, 1968, was not shown. This fact is not disputed that H. R. Capoor was managing and looking after the assessee-company and he breathed his last on March 16, 1968. After his death, the licence which stood in his name was cancelled. Thereafter, certain employees of the hotel and a step-son of the deceased, forcefully took possession of the assessee''s bar, restaurant and hotel and carried on the business not on behalf of the assessee but on behalf of themselves. Thereafter, civil and criminal litigation also started between the assessee and the group of persons who were carrying on the business. Therefore, the income derived from the hotel, bar and restaurant was not included in the income of the assessee. Since for the period from June 2, 1968, to December 31, 1968, the business has not been carried on by the assessee and no income as such has been derived by the assessee, therefore, the same is not liable to be included in the income of the assessee for the assessment year 1969-70.

This being so, the question is replied in the affirmative in favour of the assessee.