Law: Income Tax Act, 1961

Section: 22,28,256

Income-tax----Reference---Business--Property---Business income or income from property--Income from letting out commercial asset---General principles--¬Assessee engaged in manufacture of goods---Shed owned by assessee let out---Tribunal justified in holding that rental income constituted income from business---No question of law arises---Indian Income Tax Act, 1961, Ss.22, 28 & 256. A commercial asset can be rightfully exploited by the owner thereof to the best advantage and the advantage can be materialised either by using it himself personally or by letting it out to somebody else. So long as the commercial asset to capable of being exploited as such, it has to be understood that its income is business income. The assessee was a company engaged in the manufacture of hosiery and handloom goods. During the accounting year relevant to the assessment year 1985-86, it let out a part of its weaving shed to C on a rental of Rs.77,700. The Income Tax Officer completed the assessment accepting the said amount of income of Rs.77,700 as income derived from letting out the building under the head "business income". This assessment was opened by the Commissioner of Income-tax under section 263 of the Income Tax Act, 1961, directing the Income Tax Officer to assess the amount in question as income from house property. The Tribunal, however, held that the amount was assessable as income from business. On an application to direct reference: Held, dismissing the application, that what was leased out was undisputedly a part of the assessee's own weaving shed which was given to C for storage of rice. The Tribunal was correct in holding that the rent received was business income. No question of law arose from its order. C.E.P.T v. Shri Lakshmi Silk Mills Ltd. (1951) 20 ITR 451 (SC); CIT v. Ajtnera Industries (P.) Ltd. (1976) 103 ITR 245 (Cal.); CIT v. National Storage (Pvt.) Ltd. (1967) 66 ITR 596 (SC); East India Housing and Land Development Trust Ltd. v. CIT (1961) 42 ITR 49 (SC) and Karanpura Development Co. Ltd. v CIT (1962) 44 ITR 362 (SC) ref. JUDGMENT V.V. KAMAT, J.---This is a petition by the Department having a grievance against the order (Annexure "C"), dated…

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