Law: Income Tax Act, 1922

Section: 9,10,12,10(2)(vii),12(4)

(a) Income-tax Act (XI of 1922)---Ss. 9, 10 & 12-Income from property-Nature of property and intention of owner-No hard and fast rule can be laid down for determining nature of income-Owner making property to be used as a commercial asset-Subsequent letting out will not bring it under S. 9-Accrual of income by a commercial asset-Held, profit of busi­ness irrespective of manner in which that asset exploited by owner of business. It is the nature of the property and the intention of the owner that will spell out the nature of the income in any given case. No bard and fast rule can be laid down for its determination. If the property was let out just after making it, the intention of the owner will b., clear that it was not a commercial asset and would be governed by section 9 of the Income­ tax Act. If the owner makes the property to be used as a commercial asset. the subsequent letting out will not bring it under section 9, unless it was clear that the assessee bad abandoned his intention to use it as commercial asset. But it cannot be said that an asset which was acquired and used for the purpose of the business ceased to be a commercial asset of that business as soon as it was temporarily put out of use or let out to another person for use in his business or trade. The past an? present business of the assessee seen in the light of the lease deed can also be of great help to gather that intention. The accrual of income by a commercial asset in the profit of the business irrespective of the manner in which that asset is exploited by the owner of the business. He is entitled to exploit it to the best advantage and be may do so either by using it himself personally or by letting it out to somebody else. C. P. Pictures Ltd. v. Commissioner of Income-tax (M. P.), Nagpur (1963) 7 Taxation 37 ; Commissioner of Income-tax, Bombay v. National Storage Private Ltd. (1953) 1 T R 577 ; Lakshminarayan Ram Gopal & Sons Ltd. v. Government of Hyderabad (1954) 25 I f R 449 (S C) ; Karanpura Development Co. Ltd. v. Commissioner of Income-tax (1962) 44 I T R 362 ..(S C) ; East India Housing and Land Development Trust Ltd. v. Commissioner of Income-tax (1961) 42 1 T R 49 (S…

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