Rental income from an unused business godown taxed as house property income, not business profits, under ownership-based assessment.

Rent from a godown constructed for business purposes but let to a third party, without being used by the assessee in its own business, was held to arise from ownership of property rather than from any business activity. The annual value was therefore required to be determined under Section 23(1) of the Income-tax Act, 1961, and the rent was assessable under the head of income from house property, not profits and gains of business or profession.

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Issues: Whether the rent received from letting out a godown constructed for business purposes, but not used by the assessee for its own business, was taxable under the head of "profits and gains of business or profession" or under the head "income from house property".

Analysis: The godown was let out to a third party and was not used by the assessee in its own business. The income arose from ownership of the property and not from any business activity carried on in relation to the letting. The annual value of such property income was therefore required to be determined under Section 23(1) of the Income-tax Act, 1961.

Conclusion: The rent was assessable as income from house property and not as business income. The question was answered in favour of the assessee.

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