Law: Income Tax Ordinance, 1979

Section: 19,22

(a) Income Tax Ordinance (XXXI of 1979)----S. 19---Rental income---Premises/properties used for manufacturing process or business---Income derived by renting out such premises/properties---Such income to be treated as rental income---Failure to produce any material evidence to show that the closure or stoppage of the business or manufacturing process was merely temporary and not permanent and the properties were rented out on temporary basis---Effect---Income derived by renting out the premises/properties which were being used for manufacturing process or business could not be construed to be income from business and the same was to be treated as rental income liable to assessment under the head "rental income". C.I.T. (Appeals) v. Muhammad Allah Bux 1977 PTD 13; CIT v. Narayandas Kishindutt (1988) 149 ITR 636; CIT. v. Rampur Industries Ltd. (1971) 82 ITR 23 and CIT v. Hindustan Chemical Works (1980) 124 ITR 561 ref. (b) Income Tax Ordinance (XXXI of 1979)---Ss.19 & 22---Rental income---Premises/properties used for manufacturing process or business---Income derived by renting out such premises/properties---Failure. to establish that the premises were temporarily rented out till the time the manufacturing process or business was restarted after installing new machinery---Income-tax Authorities assessed the income under S.19 of Income Tax Ordinance, 1979, as income from rental--­Commissioner Income-tax as well as the Income-tax Appellate Tribunal found the income as one from business and to be assessed under S.22 of Income Tax Ordinance, 1979---Validitl---Asscssce had been absolutely quiet and had not been able to establish that they, at any time during the period that had lapsed since closure of the manufacturing business, reflected or showed any real and positive interest, desire or intention to restart the business of manufacturing---Both the Income-tax Commissioner and the Income-tax Appellate Tribunal had fallen in error in holding that the income of the assessee was derived from leasing out the godowns and part of factory premises was incidental to or connected with the process of manufacturing business and was to be construed as income liable to be…

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