Commercial exploitation of shopping mall space yields business income, not house property income, when the owner actively manages the asset.

Rental receipts from shop rooms in a shopping mall are taxable as business income where the owner does not act as a passive lessor but commercially exploits the asset through development, management, and provision of common facilities and services. The controlling test is the real nature of the exploitation of the property, not merely ownership of the building. On those facts, the receipts were not assessable as income from house property and were treated as profits and gains of business.

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Issues: Whether the rental receipts from shop rooms in a shopping mall developed and managed by the assessee were assessable as income from house property or as profits and gains of business.

Analysis: Section 22 of the Income-tax Act, 1961 applies to annual value of property owned by the assessee, but the character of the receipts depends on the real nature of the exploitation of the asset. The controlling test is whether the assessee merely let out the property as owner or commercially exploited it as part of its business. The facts showed that the assessee was not a passive lessor: it developed and managed the mall, provided common facilities and services, and derived income from an organized commercial activity. On those facts, the receipts could not be treated as mere rental income from property.

Conclusion: The receipts were business income and were not assessable under the head income from house property; the issue was decided in favour of the assessee.

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