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of <h1>Marriage hall licensing with chairs and sound equipment services treated as business income, not house property rent.</h1> Income derived from allowing use of an owned building for marriages and other functions, along with providing chairs, microphones and similar facilities ... Rental Income - letting out a building - Whether, the Appellate Tribunal was right in law in holding that the income derived by the assessee from letting out of the building along with chairs, mike etc., on the occasions of marriage and other functions, should be assessed only under the head 'Income from business' and not under the heads 'Income from house property' and 'Income from other sources'? - HELD THAT:- In this case, the building was put up by the assessee with the aid of donations and it has been let out by the assessee to others for functions such as marriages, and other functions, etc., and while making available the premises for limited periods, chairs, mikes, etc., were also made available to other for which a charge is levied. This activity of earning an income from making the building available to others for a charge for limited periods is not to be equated with the letting out of a building on lease from month to month or year to year, wherein it could be said that the building was being exploited by the owner to earn a rental income. Here the expression 'letting out' is used only for a limited purpose. The building remains under the control of the owner. What is granted by the owner is only a licence for a prescribed fee for a specified period. This activity of the assessee can be described as a business carried on by the assessee with the intention of earning income from the building, the business being that of making available the building to others for a charge for a limited duration. The overall control of the building at all times being retained by the assessee. The Tribunal is therefore right in holding that the income derived by the assessee from making the building owned by it available to others for a limited period for various purposes is only business income. We therefore answer the question referred to us in favour of the assessee and against the Revenue. Issues involved: Determination of the appropriate category for assessing income derived from letting out a building along with chairs, mike, etc., on the occasions of marriage and other functions.Summary:The High Court of Madras addressed the issue of categorizing income derived from letting out a building along with additional facilities for events such as marriages and functions. The assessee, a charitable institution, claimed that such income should be assessed under the head 'Income from business,' while the Revenue argued it should be categorized as 'Income from house property' or 'Income from other sources.' The Tribunal supported the assessee's position, considering it as income from a business activity carried out by the assessee.The Revenue contended that income derived from letting out a property should be taxed under 'Income from house property' based on the rentals received, citing the decision in Sultan Brothers v. CIT [1964] 51 ITR 353. However, the court noted that each case must be examined from a business perspective to determine if the letting out constitutes a business activity or property exploitation by the owner.Referring to previous judgments, including CIT v. Admiralty Flats Motel [1982] 133 ITR 895 and CIT v. National Storage Private Ltd. [1967] 66 ITR 596, the court emphasized that income from letting out properties for events can be considered business income. It highlighted the case of CIT v. Associated Building Co. Ltd. [1982] 137 ITR 339 (Bom), where letting out an auditorium with services was deemed a business activity.The court concluded that the assessee's activity of making the building available for events, charging for additional facilities, and retaining control over the premises constituted a business aimed at earning income. Therefore, the income derived from such activities was rightfully categorized as business income. The court ruled in favor of the assessee, affirming the Tribunal's decision and rejecting the Revenue's argument.In conclusion, the High Court of Madras determined that income generated from letting out a building with additional services for events falls under the category of business income, supporting the assessee's position over the Revenue's claim.
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