TaxTMI 
TaxTMI 
1984 (8) TMI 14
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....ed company incorporated under the Companies Act, 1956. The assessee-company owned a printing machinery at Baroda and a distillery plant at Whitefield near Bangalore. It had let out the printing machinery to M/s. Alembic Chemical Works Co. Ltd., Baroda, on the following terms . "(i) the lease is for a term of five years commencing from February 1, 1972, on a monthly rent of Rs. 651. (ii) the assessee has to repair and keep in proper working order, the said machinery and all additions thereto throughout the term of 5 years and to substitute the same with fittings, parts, etc., as and when necessary." The distillery plant was let out to M/s. Nirayu Associates on the following terms : " (i) The Nirayu Associates will pay to the assessee a s....
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..... The assessee then preferred a second appeal before the Income-tax Appellate Tribunal, which also concurred with the findings of the Income-tax Officer. The Tribunal noted that the assessee, which is a limited company, is one of the Alembic Group of Companies ; that the assessee had purchased the printing machinery in January, 1972, and directly installed the same in the premises of the lessee company at Baroda. The assessee never carried on any printing business of its own and never utilised the machinery for any printing work of its own. The Tribunal also further took note of the fact that although the lease was for five years, it was terminated in April, 1975, and, thereafter, the machinery was given on lease to another concern which wa....
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....ciples. However, it was emphasised that if the object of letting out the asset is to earn a profit in the ordinary course of its business, it results in business income. On the other hand, if the object of letting out the asset is merely to earn rent as owner of the asset, such income would be from " other sources", if there is no other indication to show that such asset is treated as its commercial asset and a business is sought to be carried on by the assessee. Mr. Sarangan, learned counsel for the assessee, vehemently contended that the lease of machinery and plant contemplated in the agreements, dated September 1, 1972, and November 10, 1972, was lease of commercial assets and, therefore, the income arising therefrom should be assessed....