Law: Income Tax Act, 1922

Section: 10

Section 28(1) , read with section 22 of the Income-tax Act, 1961 (Corresponding to section 10 read with section 9, of the Indian Income-tax Act, 1922) - Business income - Chargeable as - Assessment years 1953-54 to 1956-57 - Object of assessee-company was to carry on business of storing, Cinema accessories, etc. in vaults specially constructed for that purpose and equipped with all necessary arrangements and conveniences - Company accordingly constructed some units of safe deposit vaults on plot of land purchased for that purpose and permitted those vaults to be used by film distributors for said purpose on payment of monthly charge - Tribunal held that agreements entered into by company with vault-holders amounted to licences and not leases and having regard to terms of agreements, objects for which it was incorporated and conduct of company including various services rendered by assessee to vault-holders it was clear that company was carrying on business in premises and income from it was assessable as business income under section 10 and not as income from property under section 9 of 1922 Act - Whether activity of assessee in earning income was business activity and source of income by way of monthly charge of vaults was not ownership of house property but its business and, therefore, income was assessable under section 10 of 1922 Act- Held, yes FACTS The assessee-company was promoted by the film distributors of Bombay to carry on the business of storing and preserving films, chemicals, cinema, accessories etc. relating cinema industry in suitable vaults specially constructed for the purpose and equipped with all the necessary arrangements. The company purchased a plot and, after approval by the Chief Inspector of Explosives, constructed 13 units on the said plot of land in conformity with the specifications laid down in the Cinematograph Film Rules of 1948. After the construction of these units, the vaults were permitted by the company to be used by the film distributors, who were known as licencees, on terms and conditions of the agreements arrived at between them and the company on payment of specified monthly charge at varying rates. The payment, so…

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