TaxTMI 
TaxTMI 
2008 (3) TMI 710
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....ts own cost. According to the terms of the lease the assessee-company was to bear the cost and expenses necessary for the upkeep maintenance and other services required for the demised properties. In case of breach of the terms and conditions of the lease, the lessor was entitled to cancel the lease and forfeit the same and retake possession of the properties. According to the stipulation in the lease-deed, on termination of the lease whether on account of forfeitures by the lessor or surrender by the lessee or for another reason, the lessee was to deliver peaceful possession of the demised property along with all electrical, water supply and sanitary fittings and fixtures to the lessor or their successor-in-interest as the case may be. In such an event the lessor was to be not held liable to pay value of the building or structure on the demised premises or any compensation for the damage, injury or loss which may be claimed by the lessee. 3. The assessee-company derived income amounting to ₹ 1,20,700 in the assessment year 1980-81 from subletting the shops. The assessee claimed that the income was rental but it should be computed as a business income. The Assessing Officer ....
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....of 25 years on payment of lease rent on monthly basis. On 2-6-1976 the assessee entered into an agreement with the Food Corporation of India for construction of godowns and for letting out those godowns to it on a monthly rental basis. The assessee in its return for the assessment year 1979-80 claimed that rental income derived by it from the Food Corpora-tion of India was income from business but the Assessing Officer negatived its claim and held that the rental income received by the assessee is assessable under the head "Income from house property". Later on at the direction of the Inspecting Assistant Commissioner (Assessment) under section 144B of the Act, the Assessing Officer assessed the rental income in the hands of the assessee under the head "Income from other sources". The Commissioner of Income-tax (Appeals) agreed with proposal of the Assessing Officer and held that the income derived by the assessee from the Food Corporation of India was assessable under the head "Income from house property". While coming to the aforesaid conclusion it held that assessee took land on lease initially for a year and from 8-11-1978 i.e., the day the deed wa....
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....r dated 29-1-1999 passed in Civil Appeal Nos. 460-461 of 1999 set aside the judgment of this Court and remitted the matter back for consideration. This is how the reference has come up before us for consideration. Tax Case Nos. 66, 67 & 68 of 1987 8. The assessee M/s. Puja Bazar (P.) Ltd. is a private limited company deriving income as a rent from Nawal Market, known as Puja Bazar in the assessment years 1979-80, 1981-82 and 1982-83. On a lease-hold land, the assessee constructed Puja Bazar and let out the shops therein. It received rental income in the assessment years 1979-80, 1981-82 and 1982-83. It claimed those income as income from business which was accepted by the Assessing Officer. However, the Commissioner of Income-tax (Appeals) held that the assessment made by the Assessing Officer as erroneous and prejudicial to the interest of the revenue (sic) the rental income was liable to be assessed under the head 'Income from house property'. Accordingly, he set aside the assessment order and the Assessing Officer was directed to reframe the assessment in accordance with law, after giving an opportunity to the assessee. On an appeal by the assessee the order of the Commissione....
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....t should be treated as income from the house property." 13. Mr. Prakash Sahay as also Mr. S.K. Sharan appear on behalf of the revenue, whereas the assessees are represented by Mr. K.N. Jain, Senior Advocate, Mr. G.P. Bimal and Mr. Ajay Kumar Rastogi. 14. It has been contended by the revenue that distinct heads specified in section 14 of the Act, indicating the sources are mutually exclusive and income if derived from different sources falls under specific head, it has to be computed for the purpose of taxation in the manner provided by the appropriate section. If the income from sources falls within a specific head, set out in section 14 of the Act, the fact that it may indirectly be covered by another head, will not make income taxable under the later head. In support of the submission, reliance has been placed on a decision for the Supreme Court in the case of East India Housing & Land Development Trust Ltd. v. CIT [1961] 42 ITR 49. 15. The revenue further contends that to come within the head "Income from business", there has to be element of uncertainty and in the absence thereof, the rental income shall come under income from house property. It has also been ....
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....rty. D.-Profits and gains of business or profession. E.-Capital gains. F.-Income from other sources. 19. There is no difficulty in accepting the broad submission that when income falls within a specific head and it may indirectly be covered by another head, the income is rendered taxable under the specific head. The residuary head of income can be resorted to only, if none of the specific heads is applicable to the income in question. It comes into operation only when all other heads are excluded. In fact, the decision of the Supreme Court in the case of East India Housing & Land Development Trust Ltd. (supra) is clearly on the point in which it has been held as follows : ". . . But the distinct heads specified in section 6 indicating the sources are mutually exclusive and income derived from different sources falling under specific heads has to be computed for the purpose of taxation in the manner provided by the appropriate section. If the income from a source falls within a specific head set out in section 6, the fact that it may indirectly be covered by another head will not make the income-taxable under the latter head. The income derived by the company from sh....
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....ious. After all, who is to be taxed or assessed to be taxed more accurately-a person in receipt of money having actual control over the property with no person having better right to defeat his claim of possession or a person in legal parlance who may remain a remainder man, say, at the end or extinction of the period of occupation after, again say, a thousand years ? The answer to this question in favour of the assessee would not merely be doing palpable injustice but would cause absurd inconvenience and would make the Legislature to be dubbed as being a party to a non-sensical legislation. One cannot reasonably and logically visualize as to when a person in actual physical control of the property realizing the entire income and usufructs of the property for his own use and not for the use of any other person, having the absolute power of disposal of the income so received, should be held not liable to tax merely because a vestige of legal ownership or a husk of title in the long run may yet clothe another person with the power of a residual ownership when such contingency arises which is not a case even here." 22. Thus, in my opinion, the assessees' rental income is not fit....
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....as given in section 2(4) and reproduced above shows its wide amplitude and we agree with Mr. Chagla that it can embrace within itself dealing in real property as also the activity of taking a property on lease, setting up a market thereon and letting out the shops and stalls in the market. 26. The Supreme Court had the occasion to consider this question in the case of Karnani Properties Ltd. ( supra) in which it has been held as follows: "The receipts derived from hiring out their premises along with various movable fittings, and affording services in the way of heating, lighting and attendance, were receipts of an enterprise quite distinct from the ordinary receipts which a landlord derives from letting his property. Consequently, the owners of the premises were rightly held to be engaged in the carrying on a trade or business in their premises, 'the trade or business', in Lord Shaw's language at Page 37 'of providing, or providing for, public entertainments'. There is nothing to prevent a landlord who has been assessed under Schedule A in respect of his income as a property owner being also assessed under Schedule D in respect of a trade, business or other enterprise ca....