Can the Business be carried on by the assessee or his agent or servant ?

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  1. Nikil Mohan

    Nikil Mohan Member

    As per Income tax Act, can the business be carried on by the assessee or his agent or servant, if so please explain the legal provisions.
  2. Chandrashekar M

    Chandrashekar M Active Member

    The business or profession may be carried on by the assessee himself or through an agent or servant. In order that the income of the assessee should be business income, it is not necessary that the income should be produced by the assessee, utilising the business assets itself. So long as these assets are used as business assets, it is irrelevant whether the business assets are exploited and used by the assessee itself or someone else. As per the decisions of Bombay high court in CIT vs National mills co ltd 34 ITR 155, CIT vs Superfine cables pvt ltd 154 ITR 532 (Delhi high court) Instead of carrying on the business itself, the assessee permits someone else to use the assets and carry on the identical business, then the activity of the assessee is a business activity. As per the decision of the Honb'le Madras high court in G.R.Narosimier & co 73 ITR 257 & Hon'ble Patna high court in CIT Vs.S.K.Sahana & sons 102 ITR 437, the business is said to be carried on by the assessee when it is carried on by his agent or by his manager . As held by Hon'ble bombay high court in Saifuddin ali mohammed vs CIT in 25 ITR 237 and Hon'ble Madras high court in V.Ramaswamy Iyengar vs CIT 40 ITR 377. where the court appoints a receiver to carry on the business and the assessee is deprived of to carry on the same, the assessee cannot be said to carry on the business.

    -- Regards
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