Rental income from closed factory quarters is not business income when it arises only from letting out premises.

Rental income from quarters attached to a factory that had been closed for decades was treated as rent from premises, not as business income. The Court applied its earlier ruling on the same issue and noted that the matter was already settled by the Supreme Court authorities relied on there. Because the income arose only from letting out the factory quarters to tenants, and not from any ongoing business activity, the Tribunal erred in classifying it as business income. The question was answered in the negative, in favour of the Revenue and against the assessee.

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Issues: Whether rental income from let-out quarters attached to closed oil mill premises was liable to be assessed as business income.

Analysis: The assessee's oil mill business had remained closed for decades, while the income in dispute arose only from letting out the factory quarters to tenants. The Court followed its earlier decision on the same point and noted that the issue was fully covered by the settled legal position, including the Supreme Court authorities relied upon in that decision. On that basis, the character of the receipt was treated as rent from premises and not as income arising from business activity.

Conclusion: The Tribunal was not correct in holding the rental income to be business income, and the question was answered in the negative, in favour of the Revenue and against the assessee.

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