Commercial asset test determines whether rent from an idle plant is business income or taxable as non-business income.

Rental income from a dyeing plant let out after it had become idle was business income only if the plant remained a commercial asset capable of use in the assessee's trade at the time of letting. Where an asset has ceased to be usable in the business and is exploited only because the assessee cannot employ it himself, the rent is not profit from business. Applying that test, the plant had become idle due to wartime difficulty in obtaining silk yarn and had ceased to be a commercial asset in the assessee's hands, so the rental was not liable to excess profits tax as business income.

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Issues: Whether rent received by letting out a dyeing plant, which had remained idle because the assessee could not use it in its own business, constituted profits from business and was chargeable to excess profits tax.

Analysis: The decisive test was whether the plant was, at the time of letting, still a commercial asset capable of being used in the assessee's business. Income derived from a commercial asset remains business income whether the assessee uses it himself or allows another to use it, so long as the asset continues to be available as a commercial asset. But where the asset has ceased to be usable in the business and is let out only because the assessee cannot employ it in his own trade, the rent is not business profit. On the facts, the dyeing plant had become idle owing to wartime difficulty in obtaining silk yarn and had ceased to be a commercial asset for the assessee at the relevant time.

Conclusion: The rental was not profits of the assessee's business and was not liable to excess profits tax as business income.

Ratio Decidendi: Income from a commercial asset is business income only if the asset is capable of being used as part of the assessee's business at the time of exploitation; once the asset has ceased to be a commercial asset in the assessee's hands, rent from its letting is not business profit.

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