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1. M/s Shankar Trading (P) Limited (hereinafter referred to as the assessee) is engaged in the business of Katha and Cutch and had taken on lease, with effect ITAs 53/2000, 251/2007, 253/2007, 257/2007, 223/2002 247/2002, 45/2005, 50/2005, 1207/2005, from 01.06.1978, a factory belonging to Mehta Charitable Prajnalay Trust (hereinafter referred to as "the Trust"), which also was engaged in the business of manufacturing of the same products. Shri Bishan Dass and Shri Raj Kumar, two of the trustees of the Trust were also the directors and shareholders of the Assessee Company. 3 out of 5 directors of the assessee company were the sons of two trustees of the Trust. It is also an admitted position that bulk of the shares of the assessee Company was held by the trustees of the Trust and their family members. Initially, the lease rent was fixed at Rs 25,000/- p.m., which was later increased first to be Rs 50,000/- p.m. and then to Rs 1,00,000/- p.m. As on 31.12.1991, the assessee was paying lease rental of Rs 1,00,000/- p.m. to the Trust, in respect of the factory taken on lease. The assessee entered into a fresh lease deed on 18.01.1992, whereby the lease rent was enhanced to Rs 6,75,000/- per month with effect from 01.01.1992.