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2008] 306 ITR 303 [2008] 173 TAXMAN 170 (GUJ.) HIGH COURT OF GUJARAT Harikrishna Family Trust* v. Commissioner of Income-tax, Surat D.A. MEHTA AND Z.K. SAIYED, JJ. IT REFERENCE NO. 20 OF 1997 FEBRUARY 25, 2008 Section 56, read with sections 22 and 28, of the Income-tax Act, 1961 - Income from other sources - Chargeable as - Assessment years 1986-87, 1987-88 and 1989-90 - Assessee-trust took on lease a partly constructed building and after completing construction work rented out whole premises to Posts and Telephone Department - In its return of income, it showed rental income as income from house property - Assessing Officer, however, held that trust was created for specific purpose of leasing out property with intention to sublet in order to earn profit and, therefore, income was taxable as business income - Whether since assessee was merely a lessee and not owner of property, rental income from said property could not be taxed under head 'income from house property' in its hands - Held, yes - Whether further, since assessee, at no point of time, had indulged in any systematic activity so as to treat it as having indulged in business or a venture in nature of business, income from property could not be taxed as business income and, therefore, income was liable to be taxed as income from other sources - Held, yes FACTS The assessee-trust took on lease a partly constructed building and after completing construction work of the balance portion of the building, it rented out the whole premises to the Posts and Telephone Department. In its return of income, it showed the rental income as income from house property. The Assessing Officer held that the assessee was not the owner of the property and, hence, its income could not be assessed as 'income from house property' under section 22. He further held that the trust was created for specific purpose of leasing out the property with the intention to sublet in order to earn profit and, hence, income derived by it in the form of rental income was taxable under the head 'Income from profits and gains of business or profession'. On appeal, the Commissioner (Appeals) agreed with the findings of the Assessing Officer that…

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