Employee quarters rent treated as business income where letting was incidental to the company's main business.

Rent from residential quarters let to employees was treated as an incident of the company's business, not as a separate property source. Because the quarters were maintained for business purposes and the letting was subservient to the main business, the receipts fell within the exception to section 9 relating to property used for business. The rent was also separately ascertainable and severable from rent received from outsiders. On that basis, the employee-quarter rent was assessable as business income under section 10 rather than as income from property under section 9.

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Issues: Whether rent realised by an assessee-company from residential quarters let out to its employees is assessable under section 9 as income from property or under section 10 as business income.

Analysis: The residential quarters were maintained and let out to employees as an incident of the company's business and not as a separate source of income. The letting of such quarters was subservient to the main business and fell within the exception to section 9 applicable to property occupied for business purposes. The rent from employees was separately ascertainable and severable from rent received from outsiders, and the latter was not in dispute.

Conclusion: The rent received from employees' quarters is assessable under section 10 and not under section 9, and the answer is in favour of the assessee.

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