Law:

Section:

Section 22, read with section 28, of the Income-tax Act, 1961 - Income from house property - Chargeable as - Assessment years 1984-85 to 1988-89 - Assessee received income by renting out warehouses owned by it to Food Corporation of India - Whether rental income received by assessee should be assessed under head 'Income from property' and not as business income - Held, yes CASES REFERRED TO Karanpura Development Co. Ltd. v. CIT [1962] 44 ITR 362 (SC) [Para 2] and East India Housing & Land Development Trust Ltd. v.CIT [1961] 42 ITR 49 (SC) [Para 3]. T. Ravikumar for the Applicant. JUDGMENT R. Jayasimha Babu, J. - The assessment years are 1984-85 to 1988-89. The question referred in these tax cases is : "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the rental for the mere letting of godowns received by the assessee should be assessed under the head 'Income from business' and not 'property'?" 2. The assessee had, during these years, received income by way of rent from the Food Corporation of India, which had taken the warehouses belonging to the assessee on lease. Though the assessee had claimed that such income be treated as its business income and not as income from house property, the Assessing Officer treated the rental income as income from house property and completed the assessment accordingly. On appeal, the appellate authority, relying on the decision of the Supreme Court in the case of Karanpura Development Co. Ltd. v. CIT [1962] 44 ITR 362, held that the rental income should be assessed as business income. That view of the appellate authority having been upheld by the Tribunal, the Revenue has brought these references before us. 3. The income which the assessee had received was for the renting out of the warehouses owned by it to the Food Corporation of India. One of the objects of the assessee-company was to build warehouses and to let out the same. In the case of East India Housing & Land Development Trust Ltd. v. CIT [1961] 42 ITR 49, the Supreme Court, in the context of facts which were similar to those found in this case, held that the rental income is to be…

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