K. Shivashankar Bhat, J. ( 1 ) AT the instance of the Revenue, the Income Tax Appellate-Tribunal has referred the following questions to this court under Section 256 (1) of the Income Tax Act, 1961, in a proceeding for the assessment year 1971-72:- "1. Whether on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the lease money of Rs. 8,80,000. 00 received by the assessee during the assessment year 1971-72 was assessable u/s. 28 of the Income Tax Act, 1961 as income from business ?" "2. Whether on the facts and in the circumstances of the case, the Tribunal was legally justified inholding that the assessee company was entitled to the development rebate on new machinery installed during the accounting period relevant for the assessment year 1971-72 which was leased out?" ( 2 ) THE assessee company owned a factory in Faridabad wherein it had installed machinery etc. for manufacturing various items of Iron and Steel including heavy castings. The accounting year of the assessee company ends every year on 31st March. It started manufacturing operations for the first time on 28th December, 1968. The manufacturing was done by the company upto 31. 5. 1970. Thereafter, it was decided by the aforesaid company that it should lease out the factory building, machinery etc. to a sister concern to begin with for a period of one year The circumstances under which and the terms and conditions on which the aforesaid proper- ties were leased were contained in the lease deed dated 1. 6. 1970. In terms of the said lease deed, the company had mortgaged its building and plants etc. to M/s. Harayana State Financial Corporation for a sum of Rs. 12 lakhs whereon it had to pay interest of 9-1/2%, besides it had various other creditors to whom it had to pay interest at 10 to 15%. The assessee also needed more finance to the tune of Rs. l5 lakhs to meet the cost of furnace and rolling mills already ordered for being set up in the existing premises. M/s. Northern India Finance Co. , a partnership firm, agreed to advance to the assessee the aforesaid finance. For these economic reasons, and for the betterment of the company s prospect , it was decided by the shareholders of the company in the meeting held on 30. 3. M/s. Northern India Finance Co. , a partnership firm, agreed to advance to the assessee the aforesaid finance. For these economic reasons, and for the betterment of the company s prospect , it was decided by the shareholders of the company in the meeting held on 30. 3. 1970 that instead of running the above mills itself, it should give on lease the furnace and the rolling mill presently installed and the furnace and rolling mills to be installed to the lessee firm on, inter alia, the following terms and conditions stated in the lease deed dated 1st June, 1970:- (I) That the original lease of the deed would be for one year. But the option was given to the lessees to seek extension of the period by exercising such option through a communication before the expiry of the original terms of the lease. (ii) That the lease money, payable from 1st day of June, 1970 to 30th day of September, 1970, would be Rupees 40,000. 00 and thereafter it would be inereased to Rs. l,20,000. 00 per month with effect from 1. 10. 1970, on the second furnace and rolling mills being set up. (iii) That the stock in trade, raw material and semi-finished goods would be delivered by the lessor to the lessee on such price as may be agreed upon between the parties . (iv) That the lessor had entered into certain contracts with the Railways in respect of which the lessees would undertake to manufacture and supply the same to the Railway at rates agreed upon by the lessees and the Railway and on such supplies by the lessor to the Railways, the lessor would be entitled to a commission @ 10% only on the amount of the bills. (v) The lessor company had placed certain orders for the purchase of the raw material. It was agreed between the lessor and the lessee that all such supplies from today i. e (1-6-1970) will be accepted by the lessees on the sameterms Comrn. Of Income Tax, Delhi-1 v. Northern India Iron and Steel Co. Ltd 437 and conditions as if these were orders placed by the lessees. ( 3 ) THE aforesaid lease was continued from year to year and the last date upto which lease was agreed to be extended was 31. 12. 1975. On 6. 10. Of Income Tax, Delhi-1 v. Northern India Iron and Steel Co. Ltd 437 and conditions as if these were orders placed by the lessees. ( 3 ) THE aforesaid lease was continued from year to year and the last date upto which lease was agreed to be extended was 31. 12. 1975. On 6. 10. 1975 the lessees again wrote to the lessor to extend the lease upto 31. 8. 1976 and, accordingly the following resolution was passed on 29. 10. 1975 by the assessee company:- "resolved that the lease period of factory building, plant and machinery be and is hereby extended by another term of eight months i. e. from 1. 1. 1976 to 31. 8. 1976 on the existing terms and conditions and lessee M/s. Northern India Finance Company be informed accordingly. "it was further resolved that: "in no case any further extensions will be allowed as time to time, extension was allowed only in view of the pendency of execution of contract of Beas Purchase Organisation". ( 4 ) THE assessee had tendered for supplying heavy castings and other machinery to Beas Project Works sometime in 1973 and the tender of the assessee company was accepted in October, 1973. The assessee placed order for manufacturing the said heavy castings with the lessee firm which manufactured the same in the factory premises of the assessee company and it was in this connection that the lease was being extended after 1973 in favour of the lessees with a view to enable them to manufacture the aforesaid heavy castings so that the lessor could supply them to the Beas Project Authorities. ( 5 ) IN terms of the lease deed, the assessee received the sum of Rs. 8,80,000. 00 during the accounting period relevant for the assessment year 1971-72 from the lessees as lease rent. Before the Income Tax Officer, the assessee claimed that the said rent was assessable as business income and not as income from other sources. In addition, the assessee s further clam was that it should be allowed development rebate on the new machinery valuing Rs. l9,92,365. 00 which was installed during the previous year and leased out to M/s. Northern Indian Fiance Company Pvt. Ltd. The Income-Tax Officer did not accept theassessee s claim and treated the income from lease rent as income from other sources. As a consequence of his above finding. l9,92,365. 00 which was installed during the previous year and leased out to M/s. Northern Indian Fiance Company Pvt. Ltd. The Income-Tax Officer did not accept theassessee s claim and treated the income from lease rent as income from other sources. As a consequence of his above finding. be declined to allow development rebate to the assesser. ( 6 ) THE Appellate Assistant Commiddioner held that the income of the assessee was a business income falling under Section 28 of the Act and not to be assessed under Section 56 as "from other sources". For the same rea- son he granted the assessee relief of development rebate also. The Appellate Tribunal also upheld the assessee s claim on both counts. It held that the commercial assets of the company were temporarily let out to the lessee and therefore the income derived by the assessee from this lease was its business income. The development rebate was also held as allowable. ( 7 ) THE learned counsel for the Revenue contended that the circumstances of the lease in question, read with its terms clearly show that the lessee had given up the intention of continuing the business and the facts of the case are similar to the one involved in the decision of the Supreme Court in New Savan Sugar and Gur Refining Co. Ltd. v. Commissioner of Income Tax (SC); 74 ITR 7. The learned counsel pointed out that even the stock-in-trade, raw material and semi- finished goods as on the date of the lease were sold to the lessee, that the lease continued for several years till 31. 8. 1976; even the tender for supply of heavy castings and other machinery to Beas Project Works, made by the assessee; was supplied after getting them manufactured by placing order with the lessee. ( 8 ) APPELLATE Tribunal has given a finding (which is prima facie a finding of fact), that the assessee cannot be held as having ceased its business of manufacturing iron and steel goods, heavy castings etc. and of selling the same; it had temporarily suspended its activity of manufacturing the goods directly, in view of its financial situation; the supply made by the assessee to Beas Project itself shows that it continued in its business; tem- porarily it had changed its mode of doing the business. and of selling the same; it had temporarily suspended its activity of manufacturing the goods directly, in view of its financial situation; the supply made by the assessee to Beas Project itself shows that it continued in its business; tem- porarily it had changed its mode of doing the business. The commercial assets of the assessee continued to belong to it, which were leased to earn income. ( 9 ) WHILE we are in agreement with this conclusion, it is also necessary to point out that the stock-in-trade etc. sold to the lessee, as on the date of the lease deed was an inevitable consequence of the lease and from that it cannot be inferred that the assessee had decided to close its business. The fact that the machineries were installed even after the lease, is a factor indivative of the assessee s intention to take up manufacturing activity in the near future. ( 10 ) THE decision of the Supreme Court in New Savan Sugar and Gur Refining Co. Ltd. case (74 ITR 7) is based on the particular facts of the said case. The lessee in the said case was permitted to set up additional machinery without interference from the lessor (vide page 14 ). The cumulative effect of the several clauses of the lease deed, was that the lessor had no intention to treat the factory and machinery, etc. as a commercial concern during the subsistence of the lease. The lessor (assessee) ceased to carry on any business, and it seems assessee s only income was the royalty received by it under the lease. However, after referring to an earlier decision in CEPT v. Sri Laxmi Mills Ltd. ; 20 ITR 451 (SC), the Court held, at page 15 :- "it was held by this court that a part of the assets did not cease to be commercial assets of that business merely because it was temporarily put to a different use or let out to another and accordingly the income from the assets would be profits of the business irrespective of the manner in which the assets were exploited by the company. But this court clearly indicated that no general principle could be laid down which would be applicable to all cases and that each case must be decided on its own circumstances according to ordinary common sense principles. But this court clearly indicated that no general principle could be laid down which would be applicable to all cases and that each case must be decided on its own circumstances according to ordinary common sense principles. " ( 11 ) IN a subsequent decision of the Supreme Court in C. I. T. v. Vikmm Cotton Mills Ltd. (SC); 169 ITR 597, above decision was confined to the special facts of the said case. The business assets of the assessee were let out for 10 years, in the said case. Management of the company was transferred to a board of trustees appointed by the High Court. The question was, whether the rental income was a business income of the company. At page 606 the Court held- "in each case, the intention has to be gathered as to whether the commercial asset was intended to be exploited by the assessee or whether it was intended to be used by letting it out for a temporary period. It depends upon the facts and circumstances of each case". After referring to the facts, the court held, at page 607: "in the context of these facts, it appears that it was a possible conclusion that the assessee intended that there should be a temporary suspension of the business for the purpose of reconstruction of the company and for that matter, there must be stoppage of the user of the machinery by the assessee. It was a temporary lease though for 10 years or 19 years on renewal and after the expiry of the period, the property reverted back to the assessee. It is predominantly a matter of intention. Intention is an inference to be drawn fromthe relevant facts. All the relevant facts, it appears, have been considered by the Tribunal from the correct standpoint, i. e. an ordinary prudent businessman or as in England, it used to be "man on the top of the platform omnibus" or "director s arm chair". If, on that test, a plausible conclusion has been drawn, no objection can be taken. On that basis, applying the correct principle, the Tribunal found that the intention was not to part with the machinery but to lease it out for a temporary period as a part of exploitation. If, on that test, a plausible conclusion has been drawn, no objection can be taken. On that basis, applying the correct principle, the Tribunal found that the intention was not to part with the machinery but to lease it out for a temporary period as a part of exploitation. In such a circumstance, it cannot be said that no business was carried on and their income derived from the machine letting was only a rental income. There was a temporary suspension of bus ness for a temporary period with the object of tiding over the crisis condition. There was never any act indicating that the assessee never intended to carry on the business. In the background of these principles and in the facts and circumstances of the case so found, we cannot say such a finding was either perverse or not sustainable. " ( 12 ) IN the instant case, initially the lease was only for one year. Subsequently it was renewed in view of the assessee s financial requirements. The total period of the lease was about six years. The assets were commercial assets and when the assessee had to supply articles to Beas Project, it got them manufactured in the very factory. From this it is also dear that the assessee continued in business. The suspension of the manufac turing activity activity was only for a temporary duration, extended from time to time which in all was for about six years. The Appellate Tribunal has, by applying correet principles, come to the conclusion that the assesse continued in business and the activity in the factory by the assessee was suspended as a temporary measure. Necessarily, the answer to the first question shall have to be in the affirmative and against the Revenue. It is answered accordingly. RE: Second Question ( 13 ) ADMITTEDLY, the machinery in respect of which the rebate is claimed under Section 33 of the Act, was purchased by the assessee and installed in the leased factory, after the grant of the lease. The learned counsel for the assessee contended that if the income derived by the assessee after the lease, is its business income, it follows that the said income was derived by using the machinery owned by the assessee. This was also the new taken by the Appellate Tribunal. ( 14 ) WE cannot agree. The learned counsel for the assessee contended that if the income derived by the assessee after the lease, is its business income, it follows that the said income was derived by using the machinery owned by the assessee. This was also the new taken by the Appellate Tribunal. ( 14 ) WE cannot agree. To attract Section 33 of the Income Tax Act, 196, atleast two conditions should be satisfied (i) The machinery or plant in question should be owned by the assessee; and (ii) it is wholly used for the purposes of the business carried on by him. ( 15 ) IN the instant case, the machinery Was leased; the lessee had the control over the use of the machinery; The assessee had no control over its user. The machinery, as a fact, was used by the lessee. Mere lease of the machinery, even if it is to be assumed as a mode of using the machinery to derive the business income, it cannot be held that the machinery was wholly used for the business of the lessee. The machinery was also used for the business of the assessee. It may be, that, the concept of wholly used is not the same as the exclusive used . But it conveys the meaning of exhaustive user of the machinery, as by the assessee. This is possible only when the assessee has control over the user. The term wholly used for the business is referable to the manner of its user. The meaning of the word user cannot be confined to the actual derivation of a financial benefit; it includes a proper control over the machinery in the matter of its utilisation, running, repairing, replacement, etc. ( 16 ) THE question need not detain us longer, inview of the observations of the Supreme Court in Mahnbir Cold Storage v. Commissioner Of Income Tax: 188 ITR91. At page 96 the court held: "the capital asset, namely, the ship, plant or machinery, should be owned by the assessee during the relevant accounting year and wholly used in the business carried on by the assessee during the previous year in question. There must exist unity of ownership and user in the business. The emphasis for entitlement to rebate accrues from the use of the machinery or the plant by the owner for the purpose of. There must exist unity of ownership and user in the business. The emphasis for entitlement to rebate accrues from the use of the machinery or the plant by the owner for the purpose of. its business resulting in the manufacture of the goods or services. It is not the ownership of the goods or the resultant end productof the raw materials used that is relevant. The only relevant consideration is that. during the previous year or part of the relevant period, ownership of the asset shall remain with the assessee. Only the successor-in-inter est of the business; in accordance with the provisions of the Act, so long as the twin requirements under Section 33 (1) are fulfilled, is entitled to the benefit. But, when the unity of ownership and use of the asset in the business are disrupted or a branch of an earlier business is taken over by a new firm which exists simultaneously with the other branches of the old business, the benefit of development rebate under Section 33 (1) does not extend to either firm. Take. for instance, a case where an assessee leases the asset to anether person during the previous accounting year, the use of of and machinery is not for the business of the assessee for which the development allowances were accorded under Section 33 (1) since the machinery was not wholly used by the assesses for his/its business during the previous accounting year. Suppose the plant ormachinery was used for a purpose other than the business of the assessee, then also the assessee is not eligible for development rebate, obviously for the reason that the plant or machinery was not used for the purpose of the business of the assessee in the previous accounting year or a portion thereof. " ( 17 ) THE idea is neatly summed up, (if we can say so with respect to the learned Judges), when the court said, "there must exist unity of ownership and user in the business". ( 18 ) THE answer to the second question, therefore, is in the negative and in favour of the Revenue. Reference answered accordingly.