Law:

Section:

Section 28(i), read with sections 22 and 256 of the Income-tax Act, 1961 - Business income - Chargeable as - Assessment year 1978-79 - Income derived by assessee from leasing out hotel property for a period of 20 years on monthly rent basis was assessed by ITO as business income - Commissioner in exercise of revisional powers set aside order of ITO and directed him to recompute income under sections 22 and 23 - On appeal, Tribunal restored order of ITO - Whether referable question of law as to whether Tribunal was justified in holding that income derived by assessee from leasing out said property was income from profits and gains of business did arise from Tribunal's order - Held, yes FACTS The assessee executed a lease whereby its hotel property was let out on monthly rent for a period of 20 years. While framing the assessment, the ITO treated the rental income received by the assessee as his business income. The Commissioner, exercising his powers under the provisions of section 263 held that the order of the ITO was erroneous and prejudicial to the interests of the revenue inasmuch as the ITO had completely overlooked certain vital facts. The Commissioner set aside the order passed by the ITO and directed him to recompute the income from leasing out the hotel in accordance with the provisions of sections 22 and 23. On appeal, the Tribunal held that the income derived by the assessee from leasing out the property was income from profits and gains of business. The reference application filed by the revenue was also rejected. On application under section 256(2): HELD The Tribunal was directed to state the case and refer the question of law as to whether the Tribunal was justified in holding that the income derived by the assessee from leasing out the hotel property was income from profits and gains of business. Note: The case was decided in favour of the revenue. B.K. Rawat for the Applicant. V.S. Malhotra for the Respondent. JUDGMENT G.G. Sohani, Actg, CJ.-This is an application under section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The material facts giving rise to this application briefly are as follows: The…

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