Composite ginning charges and storage income must be apportioned proportionately, not split by a blanket 50% rental attribution.

Charges under a ginning and pressing agreement were treated as composite receipts, because the arrangement included storage facilities in godowns as well as labour and allied operations. A flat attribution of 50% of the charges as rental income was held unsustainable, since the true income element attributable to storage had to be determined by proportional factual allocation rather than a blanket percentage. The court noted that a remand for fresh allocation was impracticable after a long delay, but rejected the mechanical departmental method and indicated that future assessment years should follow proportional apportionment of the composite charges.

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Issues: Whether the charges receivable under the agreement for ginning and pressing of cotton were a composite charge including a component for storage of bales, and whether a flat 50% attribution of the charges as rental income was sustainable.

Analysis: The agreement had to be examined in the light of the entire arrangement between the assessee and the federation, including the storage facility provided in the godowns and the expenditure incurred for labour and allied activities. A blanket 50% allocation could not be applied uniformly without examining the real proportion of income attributable to storage as distinct from ginning and pressing. The proper course would ordinarily have been to undertake a factual allocation on a proportional basis, but a remand after a long lapse of time was considered impracticable.

Conclusion: The departmental approach of mechanically attributing 50% of the composite charges as rental income was not accepted, and the charges were to be apportioned on a proportional basis for future assessment years.

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