Business income from tenant services treated separately from property income where organised, profit-oriented facilities were provided.

Where a landlord carried on a continuous, organised and profit-oriented activity of supplying electricity, hot and cold water, lift services, scavenging, and watch and ward facilities to tenants, the receipts attributable to those services were treated as income from a separate business source rather than as income from property. The Tribunal's factual findings bound the High Court in reference jurisdiction under section 66(1), so the court could not reassess evidence or recast the factual basis. On those facts, the receipts were assessable under section 10 of the Indian Income-tax Act, 1922, and the question was answered in favour of the assessee.

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Issues: Whether the services rendered to tenants in connection with letting of flats and shops constituted a business activity so that the receipts were assessable under section 10 of the Indian Income-tax Act, 1922, rather than as income from property.

Analysis: On the facts found by the Tribunal, the assessee was carrying on a continuous and organised activity of supplying electricity, hot and cold water, lift services, scavenging and watch and ward facilities to tenants for consideration. Those activities were not merely incidental in the facts as found, but formed a distinct commercial operation carried on with the object of earning profit. In a reference under section 66(1), the High Court was bound by the facts found by the Tribunal and could not reassess the evidence or recast the factual foundation of the reference. The receipts attributable to these services therefore constituted income from a business source, distinct from income from property.

Conclusion: The receipt in question was assessable under section 10 of the Indian Income-tax Act, 1922, and not as income from property; the question was answered in favour of the assessee.

Ratio Decidendi: Where the facts found show a separate, organised and profit-oriented service activity undertaken by a landlord for tenants, the resulting receipts are taxable as business income and the factual findings of the Tribunal bind the court in reference jurisdiction.

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