2007 (5) TMI 81

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....International Pvt. Ltd., Jaipur (for short "the assessee") was incorporated on April 22, 1978. Inter alia, clause (3) of the memorandum of association provides that one of the objects of the company is to carry on all or any of the business in respect of land and/or properties, dwelling houses, hotels, motels, shops, offices, industrial estates, agricultural land, etc. 3 The aforesaid question relates to the assessment years 1981-82 and 1982-83. For the sake of convenience, we shall refer to the facts pertaining to the assessment year 1981-82. The status of the assessee is a private limited company. In the return of income filed by the assessee for the assessment year 1981-82, a loss of Rs. 967 was shown. In the profit and loss account for....

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....he assessee at Rs. 25,965 as income from the property. 6 The assessee went in appeal from the order of the assessment. The Commissioner of Income-tax (Appeals) dismissed the appeal vide order dated January 8, 1987. By this order, the appellate authority also dismissed the appeal for the assessment year 1982-83. 7 In further appeal, the Income-tax Appellate Tribunal relied upon clause (3) of the memorandum of association and held that looking to the memorandum of association of the company and overall facts of this case, the rental income received by the assessee should be assessed under the head "Income from business". 8 The legal position is no more res integra that the heads of income enumerated in the Income-tax Act are mutually exclu....

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.... nomenclature, lease, amount, rents, licence fee) received by an assessee from leasing or letting out of assets would fall under the head 'Profits and gains of business or profession'; (2) it is a mixed question of law and fact and has to be determined from the point of view of a businessman in that business on the facts and in the circumstances of each case, including true interpretation of the agreement under which the assets are let out (3) where all the assets of the business are let out, the period for which the assets are let out is a relevant factor to find out whether the intention of the assessee is to go out of business altogether or to come back and restart the same (4) if only a few of the business assets are let out temporar....