2002 (11) TMI 11

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....ppellate Tribunal was right in holding that the rental income derived from the leasing out of the property at Cathedral Road, Madras, should be assessed under the head 'Profits and gains of business or profession' only and not under the head 'Income from house property?" The necessary facts of the case are as under: The assessee is a company in which the public are substantially interested and the assessment years with which we are concerned are 1984-85 to 1986-87. The assessee was deriving income from property situated at Cathedral Road, Madras, upon its being let out to M/s. Chemicals and Plastics India Limited. The assessee claimed that the income from the building should be treated as income derived from its business and hence assessa....

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....de the transaction of lease because essentially, the object of the assessee was to derive profit from the properties and such income could be derived not only by sale but also by letting out. Thereafter, the Tribunal held that the income from the building should be assessed as "income from business". However, we are unable to accept the view of the Appellate Tribunal as the Tribunal has focussed its attention only to the objects clause of the assessee-company. This court in Anaikar Traders and Estates P. Ltd. v. CIT (No. 1) [1990] 186 ITR 175 has held that there must be material to show that the assessee treated the property as commercial asset. This court in the said case noticed the decision of the Supreme Court in Karanpura Development ....

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....e from property', subject to the deductions provided under section 24 of the Act. In the view we have taken, it is unnecessary to refer to the several decisions relied on by counsel on both sides. We, therefore, answer the common question referred to us in the affirmative and against the assessee-company." This court held that there must be some material to show that the assessee treated the property as commercial asset. On the facts of the case, we find that the Commissioner of Income-tax (Appeals) decided the matter on the ground that the company did not have any objects clause and hence he held that the income should be assessed as income from house property. The Appellate Tribunal decided on the basis of the objects clause. The Tribun....