Ordinary commercial meaning of investment applied to income-yielding property, sustaining treatment of the company as mainly holding investments.

For section 23A of the Indian Income-tax Act, 1922, "investment" was construed in its ordinary commercial sense, not as a term of art. Income-yielding immovable property, including houses let for rent, could constitute investments where the company's objects and main income showed that such properties formed its principal business. Classification of that income under section 9 did not change the character of the underlying assets, because the Act's heads of income are only a mode of computation. On that basis, the company was treated as one whose business consisted mainly in holding investments, and the departmental position was sustained.

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Issues: Whether the assessee was a company whose business consisted wholly or mainly in the dealing in or holding of investments for the purposes of section 23A of the Indian Income-tax Act, 1922.

Analysis: The relevant statutory test under section 23A and Explanation 2 required the character of the company's business to be determined on the facts and in the ordinary commercial sense of the word "investment". The Court held that "investment" is not a term of art and, in this context, covers money laid out in income-yielding property, including house properties from which rent is regularly derived. The assessee's objects included purchase and letting of lands and buildings, and its principal income was derived from such properties; those activities were treated as the company's main business. The assessment of that income under section 9 did not alter its character for the purpose of section 23A, because the heads of income under the Act are only a mode of computation.

Conclusion: The assessee was a company whose business consisted mainly in the holding of investments, and the question was answered in the affirmative against the assessee.

Final Conclusion: The reference was answered in favour of the department, and the levy under section 23A was sustained.

Ratio Decidendi: For section 23A, the expression "investment" must be construed in its ordinary commercial sense, and income-yielding immovable property held and exploited as a company's main source of income may constitute investments for determining whether the company mainly holds investments.

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