TaxTMI 
TaxTMI 
2002 (11) TMI 32
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....house property' and income from 'other sources'? 4. Whether the Appellate Tribunal is right in law in confirming the order made by the Commissioner of Income-tax (Appeals) allowing the assessee's claim of depreciation ? 5. Whether the Appellate Tribunal is right in law in allowing the claim of the assessee regarding depreciation amounting to Rs. 50,486 on other assets?" At the instance of the assessee, the following question is referred to this court for its opinion: "Whether, on the facts and in the circumstances of the case, the Tribunal was not justified in accepting the income from complex letting as 'income from business' and whether the Tribunal was justified in law in allowing only 1/6th repairs of the properties in question in place of repairs to building at Rs. 2,08,118 (Rs. 1,94,476 for the assessment year 1975-76) claimed as business expenses?" Basic facts: Sarabhai Private Limited, the assessee-respondent herein, is a company incorporated under the Companies Act. It has the following properties, namely, (i) Shahibaug House situated at 13, Wittest Road, Ballard Estate, Bombay, (ii) Ahmedabad House situated at 15, Wittest Road, Ballard Estate, Bombay, (iii) Kashmir ....
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....ssee-company had not preferred any appeal before the Income-tax Appellate Tribunal against the said order. Present controversy: However, for the assessment year 1974-75 and onwards the assessee-company filed the returns of income showing income under the head "Business" in the case where there was complex letting, i.e., rental income as well as income from service charges was shown under the head "Income from business". In cases where there was simple letting, the rental income was shown under the head "Property income". However, for the assessment year 1974-75, the Income-tax Officer by his order dated September 19, 1977, rejected the said claim of the assessee and for the assessment year 1975-76, the Income-tax Officer by his order dated September 7, 1978, was pleased to reject the said claim of the assessee. In the said assessment years, the assessee also claimed depreciation in respect of the assets other than buildings used by the assessee. The Income-tax Officer was pleased to reject the said claim of the assessee. Being aggrieved and dissatisfied with the said order of the Income-tax Officer, the assessee preferred appeals before the Appellate Assistant Commissioner. The ....
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....ructural facilities, the income cannot be said to be derived from mere ownership of house property but may be assessable as income from business. He has stated that the nature of service has been mentioned in the agreement which we have referred to earlier in this behalf. He stated that whatever income which the assessee earned by way of service may be treated as business income. In support of the above contention, learned counsel for the assessee has relied on the judgment of the Supreme Court in the case of CIT v. National Storage Pvt. Ltd. [1967] 66 ITR 596. On page 602, confirming the judgment of the High Court, the Supreme Court has observed thus: "In our view, the High Court was right in holding that the assessee was carrying on an adventure or concern in the nature of trade. The assessee not only constructed vaults of special design and special doors and electric fittings, but it also rendered other services to the vault-holders. It installed fire alarm and was incurring expenditure for the maintenance of fire alarm by paying charges to the municipality. Two railway booking offices were opened in the premises for the despatch and receipt of film parcels. This, it appears t....
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....ssed by the majority does not require any interference. It is apparent that the Tribunal has taken into consideration all the relevant factors and applied the law in the correct perspective on the basis of facts and evidence, which have come on record. Nothing has been pointed out on behalf of the applicant revenue so as to enable this court to take any other view of the matter. The figures of rent received and the rent paid by the assessee-company, as reproduced hereinbefore, go to establish clearly that the assessee had undertaken a business venture and it was only because of the systematic activities that the assessee-company carried on, that it was in a position to earn such a handsome rent after paying rent at a lower rate." Learned counsel for the assessee has stated that the aforesaid view has been taken by the Bombay High Court in the case of CIT v. Associated Building Co. Ltd. [1982] 137 ITR 339, 344-345, the Punjab High Court at Delhi in the case of Manohar Singh v. CIT [1965] 58 ITR 592, 597, the Andhra Pradesh High Court in the case of CIT v. A.P. Small Scale Industrial Development Corporation [1989] 175 ITR 352, 358. We have considered the facts of the case. We have ....
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....usive one, is indicative of an extensive and expanded meaning rather than a restricted or narrow meaning. In view of this, the activities which may amount to business need not necessarily be by way of trade, commerce or manufacture, or be in the nature of a profession. They may even consist of rendering of services as in the case of selling agents, managing agents and these services may be of a variegated character. In this connection, reference may be made to the Supreme Court decision in the case of Lakshminarayan Ram Gopal and Son Ltd. v. Government of Hyderabad [1954] 25 ITR 449 wherein it has been emphasized that the considerations which apply for deciding whether there is a business in the case of individuals within the meaning of the inclusive definition may not necessarily apply in the case of incorporated companies. It cannot be disputed that the assessee was not only receiving the amount of rent from the tenants but was also receiving amounts in consideration of the services rendered to its tenants. For the said purpose, the assessee had maintained certain staff and had also invested amounts in several assets like air-conditioners, air conditioning plants, telephones, wa....
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....ould be treated as "profits and gains of business or profession" and accordingly the allowable expenditure shall be deducted from the respective heads of the said income. The Tribunal shall look into the facts and give effect to the aforesaid direction for the purpose of assessing the income of the assessee for the assessment years in question. In view of the above conclusions, we answer the questions referred to us as follows: So far as the first question is concerned, our answer is in the negative, i.e., we decide the question in favour of the assessee and against the Revenue. In view of our answer which we have given, the assessee will be entitled to permissible deduction as income from house property to the extent for which the property is used and also deduction permissible under the head "Income from business" as we have held the said income as income from business. So far as the second question is concerned, the Tribunal was right in allowing collection charges amounting to 6 per cent. of the annual letting value under the head "House property income". However, as regards the balance amount, the assessee is entitled to claim deduction under section 28 of the Act. As reg....