Commercial exploitation of industrial sheds as part of a trading venture leads to business income, not property income.

Rental receipts from industrial sheds were treated as business income because the assessee's memorandum and prospectus showed that constructing industrial estates, promoting industries, and providing consultancy and supporting infrastructure were part of its commercial objects. The sheds were not exploited as a bare letting of property by an owner simpliciter; they formed an integral part of a trading venture in which the property was commercially deployed alongside infrastructural and related services. On that reasoning, the receipts were assessable as business income and not under the head income from property.

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Issues: Whether the income derived from the industrial sheds constructed on leasehold land and let out with infrastructural and consultancy facilities was assessable as business income or as income from property.

Analysis: The assessee's memorandum and prospectus showed that promoting industries, constructing industrial estates, and rendering consultancy and related services were part of its objects and business plan. The industrial sheds were not let out as a bare building by an owner simpliciter; they formed part of a larger commercial venture undertaken to promote industries, with infrastructural facilities and supporting services. The controlling principle applied was that where letting is part of a trading operation and the property is exploited commercially as an integral part of business, the receipts are business income and not income from property.

Conclusion: The receipts from the industrial sheds were held to be business income and not assessable under the head income from property.

Ratio Decidendi: Where an assessee's dominant object and activities show that the construction and letting of premises form an integral part of a commercial or trading venture, the rental receipts are assessable as business income rather than as income from property.

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