Law:

Section:

Section 56 of the Income-tax Act, 1961 - Income from other sources - Chargeable as - Assessment years 1962-63 to 1964-65 - Assessee-company, formed for purposes of manufacturing pipes fittings, constructed factory sheds fitted with electrical installations - Manufacturing business could not be started for want of certain machinery and, therefore, assessee let out said factory sheds and derived rental income therefrom - Whether since assessee had not started its manufacturing business, it could not be said that assessee had derived rental income by exploiting its commercial assets through other agencies, and, therefore, rental income could not be assessed as income from business - Held, yes - Whether since electrical installations could not be utilized separately from factory sheds, rental income was assessable as income from other sources - Held, yes Section 28(i) of the Income-tax Act, 1961 - Business income - Chargeable as - Assessment year 1964-65 - Assessee's non-factory buildings was utilised by assessee mainly for its own business purposes but portions thereof which assessee for time being did not consider it necessary to exploit itself, were let out and assessee exploited same through other agencies - Whether income derived from letting out of surplus of non factory building was business income - Held, yes FACTS The assessee-company was formed with the main object of manufacturing pipe fittings. In pursuance of said object, it constructed factory sheds fitted with electrical installation. It could not start manufacturing for want of certain machinery for which it had obtained import licences. For the assessment years 1962-63 to 1964-65. the assessee let out the factory sheds and claimed that its rental income was assessable as business income. In 1963-64, it also let out the open plot of lands and some godowns contracted on the open lands. The Tribunal found that the factory shed with electrical installation was peculiarly suited only for manufacture or industrial purposes, that the high tension wires and transformer, which were installed thereon, could only be utilized along with the factory shed and, that since the assessee had not commenced the…

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