Business income treatment for company property used as office and staff accommodation, not separate house property taxation.

Rental receipts from property used for the assessee company's business were treated as business income rather than income from house property. The company had shifted its registered office to the premises, used one room as an office, and permitted its managing director to occupy the remaining portion without rent under board authorisation. The Tribunal held that the letting arrangement was incidental to the company's business, so the income was not separately assessable under section 22 of the Income-tax Act, 1961. The view was said to be consistent with an earlier Madras High Court decision on the same principle.

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Issues: Whether the income from the property at 54, Arch Bishop Mathias Avenue was assessable in the assessee company's hands under section 22 of the Income-tax Act, 1961, or whether it was to be treated as income from business because the property was used in connection with the company's business.

Analysis: The company had shifted its registered office to the premises in question, with one room used for office purposes and the remainder occupied by the managing director without rent under authorisation of the board. The Tribunal held that letting of property to employees was incidental to the business carried on by the company and therefore the resulting income was assessable as business income rather than as income from property. The view was consistent with the earlier decision of the same Court on the same principle.

Conclusion: The income from the property was not separately assessable in the assessee's hands under section 22; the question was answered in the affirmative and against the Department.

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