Business income treatment for commercial complex rentals with facility charges where the asset was exploited as a trading venture

Receipts from letting a commercially developed complex, together with organised facility and service charges, were treated as business income because the asset was held and exploited as part of a business venture rather than as an owner's investment. The decisive principle was that where property is acquired or used as a commercial asset in the course of trading activity, the resulting income follows that commercial character. Accordingly, lease rentals and maintenance receipts were assessable as business income and not as income from house property.

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Issues: Whether the income derived from leasing out the commercial complex, together with charges for facilities and services, was assessable as business income or as income from house property.

Analysis: The assessee had taken land on lease as a business venture, constructed a commercial complex from its funds, and exploited the complex by letting it out to tenants. The assessee also provided organised facilities and services such as watch and ward, maintenance, supply of water, lift, generator, transformer, and related amenities. The property was not held as an owner's investment but as a commercial asset developed and used in the course of business. The established principle applied was that where property is acquired or held and exploited as part of a trading or business venture, the resulting receipts are business income and not income from house property.

Conclusion: The receipts from lease rentals and maintenance charges were business income and not assessable as income from house property.

Ratio Decidendi: Income from a commercial asset taken on lease, developed and exploited as part of a business venture, with associated services and facilities, is assessable as business income rather than as property income.

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