Law:

Section:

Section 28(i) of the Income-tax Act, 1961 - Business income - Assessee, who had been in film line for a long time and had been maintaining studios for shooting films, leased out two studios owned by him in which he had earlier produced films - Whether lease by assessee was in the course of his film business so as to make rental income from leased studios assessable as business income - Held, on facts, yes Facts The assessee, a producer of several films, and was in the film line since 1949, was utilising the two film studios for producing his own films, even before he purchased the same. Subsequently, he let out the two studios to a film producing company on rent. The ITO treated the rental income as income from property against the assessee's claim that it was business income. The AAC confirmed the ITO's order but the Tribunal took into consideration several facts all of which showed (i) that the assessee's main activities consisted of film-making and film distribution and that the assessee made additions and improvements to his studios to make them suitable for shooting purposes, and (ii) that there was more than one recognized Way of running film studios on commercial lines, one being to shoot one's own pictures in the studios and the other being to let it out to other film-makers. Taking into account all the facts the Tribunal held that the lease by the assessee of the studios was in the course of his film business and not as a mere owner letting out immovable property. The Tribunal, therefore, treated the lease income as the assessee's business income. On reference: Held The Tribunal's order had taken note of several facts which, on the Tribunal's own analysis, fell under two broad heads: those which had to do with the nature and methods of carrying on film studio business as such and those which had to do with the assessee's own antecedents in the various lines of film trade. All the facts were considered by the Tribunal, in association with the assessee's own many-sided career in the film business as a producer, as a distributor, as an exhibitor, as a studio owner and the like. It was on an overall consideration of all these facts that the Tribunal had…

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