Law:

Section:

Income-tax- Business---- income-income from lease--Factory leased out by assess-e for period of 18 years-Factory under responsibility of assessee -Assessee also retaining control over members of staff and undertaking to supply raw material quotas during lease period-Assesses buying navy materials and closing stock remaining with lessee after expiry of lease-Assessee cannot be said to have stopped. exploiting the asset as a com­mercial asset-Income from lease, assessable as business income. New Savan Sugar & Gur Refining Co. Ltd. v. C. I. T. (1969) 74 I T R 7 (S C) distinguished. C. P. Pictures Ltd. v. C. I. T: (1962) 46I T R 1181 (Bom.); C. E. P. T. v. Shri Lakshrri Silk Mills Ltd. (1951) 20I T R 451 (S C) ; C. I. T. v. Katihar Jute Mills (P.) Ltd. (1979) 116 I T R 781 (Cal.) ; C. I. T. v. National Mills Co. Ltd. (1958) 34 I T R 155 (Bom.) ; C. I. T. v. Prem Chand Jute Mills Ltd. (1978) 114 I T R 769 (Cal.) ; C. L T. v. Vania Silk Mills (P) Ltd. (1978) 112 I T R 701 (Guj.) ; Dal Chand & Sons v. C. I. T. (1968) 69 I T R 247 (P & H) ; Lakshmi Industries (P.) Ltd. v. C. I. T. (1961) 41 I T R 645 (Mad.) and Sutherland v. 1. R. C. (1918) 12 T C 63 (C. Sess) ref. JUDGMENT JEEVAN REDDY, J.-The questions referred in both these referred cases are the same, namely, "whether in the facts and circumstances of the case and on, a proper interpretation of the terms of :he lease agreements, the Appellant Tribunal was justified in holding that the income from the lease was assessable under the head 'Business' for the assessment years 1970-71, 1971-72, 1972-73 and 1973-74 ?" The assessee is the Aryan Industries Ltd., Seecunderabad, incorporated in 1951, in the former State of Hyderabad. The first object in -its memorandum of association is to establish oil mills and carry on in the Hyderabad State or any other State in the Indian Union or elsewhere the trade and business of manufacturing, crushing refining and hardening oils, crude, refined, high power lubrication fuel and all other oils, their combinations and by-products either by chemicals or any other processes as the company may from time to time think fit. Having established a factory for that purpose the…

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