Business income treatment for film vault receipts where controlled access and attendant services showed a commercial undertaking.

Income from specially constructed film vaults with attendant services was treated as business income because the receipts arose from a commercial undertaking, not merely from ownership of property. The court noted that the income-tax heads in section 6 of the Indian Income-tax Act, 1922 are mutually exclusive and that the true character of the receipts depends on the real nature of the activity. The vaults were fire-proof, access was controlled, the assessee retained the key, and additional services such as fire alarms, railway booking, canteen, telephone facilities and staff support were provided. The arrangements were licences rather than leases, so the income fell under section 10, not section 9.

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Issues: Whether the income from specially constructed film vaults with attendant services was assessable as income from property under section 9 of the Indian Income-tax Act, 1922, or as business income under section 10 of that Act.

Analysis: The income-tax heads in section 6 of the Act are mutually exclusive, and the character of the receipt must be determined by the real nature of the assessee's activity. The vaults were specially constructed with fire-proof features, restricted use, and controlled access, and the assessee retained the key to the entrance. The assessee also provided fire alarm arrangements, railway booking facilities, canteen and telephone services, and maintained staff for the running of the premises. The arrangements were held to be licences, not leases, and the subject hired out was a complex one, where the return was obtained not merely from ownership of property but from a commercial undertaking carried on by the assessee.

Conclusion: The income was assessable under section 10 as business income and not under section 9 as income from property; the assessee's contention failed.

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