Temporary letting of a commercial asset remains business income when the asset retains its business character despite idle use.

Income from temporarily letting out a dyeing plant remained business income because the plant continued to be a commercial asset of the manufacturing business, even though it was idle for a period due to shortage of raw material. The Court held that temporary non-use by the owner does not destroy the asset's business character where it is still capable of business use and is exploited to earn income. The contrary view, treating such receipts as income from another source, was rejected; the rent was therefore chargeable to excess profits tax.

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Issues: Whether rent received by a manufacturing company by temporarily letting out a dyeing plant, which had been installed for its business but was idle for a time, was profits of the business and therefore liable to excess profits tax.

Analysis: The decisive question was whether the plant had ceased to be a commercial asset of the assessee's business merely because it could not be used by the assessee for a period owing to shortage of raw material. The Court held that an asset acquired and used for the purposes of the business does not lose its character as a commercial asset merely because it is temporarily not used by the owner himself. If such an asset is capable of being used as part of the business and is let out temporarily to earn income, the amount received is business income. The contrary view, that temporary non-use makes the asset redundant and converts the receipt into income from another source, was rejected.

Conclusion: The rent from the dyeing plant was income from the assessee's business and was chargeable to excess profits tax; the answer of the High Court was wrong and the appeal succeeded.

Ratio Decidendi: Income derived from a commercial asset remains business income where the asset continues to retain its character as part of the business and is temporarily exploited by letting it out, even if the owner does not use it personally for a time.

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