Law:

Section:

I. Section 22 of the Income-tax Act, 1961 [Corresponding to section 9 of the Indian Income-tax Act, 1922] - Income from house property - Chargeable as - Ancestors of assessee-landlord had set up a market area with idea to carry on business there - Assessee did not himself or through his servants carried any business in market - Infact, assessee leased out buildings, shops, godowns and also open space whenever necessary for stalls etc. - Assessee took out a licence under District Municipalities Act for market maintained staff and did all that was necessary to carry on market business by persons to whom shops, stalls etc. were leased out - Whether, on facts, income derived by assessee from market properties was assessable under section 9 of 1922 Act - Held, yes FACTS-I The assessee was the Rajah of the State and a big landlord. The ancestors of the assessee had constructed a big market area. The buildings, shops, godowns in the area were permanent structures and were leased out on long-term rents to regular traders and shopkeepers. The market also had vacant sites let out for stalls etc. only on market dates at the specified rates. No licence fee was charged in the beginning but was introduced with the enactment of District Municipalities Act. The assessee took out a license and had Superintendent, peons, watchers and sanitary staff etc. in connection with the maintenance of the market. The ITO assessed the income derived form the shops, stalls etc. as the income from the property. On appeal, the AAC confirmed the order of the ITO. On second appeal, the Tribunal confirmed the order of the AAC. On reference: HELD-I The assessee was the owner of the various buildings, godowns, shops and the open space in the market area. He did not himself carry on business in the market area nor did he carry on business through the various persons to whom the buildings had been let out. He never carried on business himself so that there might be any scope for even speculation that what had been leased out might be an undertaking. What he had done indeed was that he leased out the buildings, shops and godowns and also the open space whenever necessary for the stalls, etc. It was…

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