Commercial asset lease rent treated as business income where temporary letting was part of business revival during financial distress.

Lease rent from plant, machinery and other commercial assets was treated as business income where the assets were temporarily let out as a mode of commercial exploitation during a financial crisis. The character of the receipt depended on the manner of exploitation and the intention behind the letting; a commercial asset did not lose that character merely because the company had suspended manufacturing temporarily. On the facts, the assets were retained as business assets, the lease formed part of a plan to tide over losses and revive operations, and the Tribunal's finding was supported by relevant material. The Revenue's challenge failed.

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Issues: Whether lease rent realised from letting out the assessee-company's plant, machinery and other assets during the relevant assessment years was assessable as business income or as income from other sources.

Analysis: The character of the receipt depended on the mode of exploitation of the assets and the intention with which they were let out. A commercial asset does not cease to be such merely because it is temporarily let out when the assessee is unable to use it itself. On the facts, the company had suffered heavy losses, had stopped manufacturing activity, and the lease was part of a scheme to tide over a financial crisis and revive the business after a temporary suspension. The Tribunal's finding that the assets were retained as commercial assets and let out as a mode of business exploitation was based on relevant material and was not shown to be perverse.

Conclusion: The lease rent was assessable as business income and not as income from other sources; the Revenue's appeals failed.

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