TaxTMI 
TaxTMI 
2008 (2) TMI 344
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.... income earned by the assessee trust was "Income from Business" and not "Income from House Property" or "Income from other sources"? 2. Whether, on the facts and circumstances of the case, the rental income from the hire of the building is taxable as "income from other sources" or "Income from House Property" or "Income from Business"? 3. Whether, the Tribunal was right in law in holding that the assessee was doing business on the facts of the case?" 2. The relevant assessment years are 1986-87, 1987-88 and 1989-90. The assessee, a Trust, came into existence vide Trust Deed dated 13.12.1982. On 18.1.1983, a lease-deed was executed between the owners of one partly constructed property at Ward No. 15, Navagam, Revenue Survey No. ½ p....
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....t to order under sec. 263 of the Act, the Assessing Officer, after making detailed inquiry, held that the assessee Trust was not the owner of the property and hence the income could not be assessed as "Income from House Property" under section 22 of the Act. It was further held that the owner had carried out day to day supervision of the construction work of rest of the portion to ensure maximum economy; the Trust was created for specific purpose of leasing out the property with the intention to sub-let in order to earn profit; the entire arrangement appeared to be contrived one to divert the income from the hands of the co-owners to the dependents through the medium of the Trust; and hence, income derived by the assessee Trust in the form ....
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....ourt and the facts of the present case were similar. 7. Mr JP Shah learned advocate appearing on behalf of the assessee Trust has assailed the impugned order of Tribunal dated 8.9.1995 by contending that the Tribunal has failed to appreciate that instead of the owners of the property themselves hiring out the property, the letting out was done through the medium of the Trust which was created for the benefit of persons who are dependent relatives of the co-owners of the property. That in fact, except for letting out the premises to one tenant, namely Telephone department, no other activity was carried out by the assessee Trust. That the facts on record revealed that the assessee trust had at no point of time purchased any other property,....
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...., there can be no question of taxing the rental income from the said property in the hands of the assessee- Trust under the head "Income from House Property". To the aforesaid extent, the findings recorded by the Assessing Officer, Commissioner (Appeals) and the Tribunal, deserve to be accepted. 10. The question that survives for consideration thereafter is, whether the rental income is liable to be taxed as "Income from Other Sources" as held by the Commissioner (Appeals), or as income from business as held by the Tribunal. The Tribunal has placed undue emphasis on the fact that; (i) the lease agreement was executed on 18.1.1983 with effect from 1.1.1993, i.e. two weeks after the execution of the Trust Deed, namely, 13.12.1982; and (ii)....
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....ly incorrect by the Tribunal and no reasons are advanced as to why and how the said findings are dislodged except to the extent of the aforesaid two findings recorded by the Tribunal. 12. In the circumstances, when the settled principles of law in relation to the controversy are applied to the facts of the case, it becomes apparent that the assessee trust at no point of time indulged in any systematic activity so as to treat the assessee as having indulged in business or a venture in the nature of business. The decision relied upon on by the revenue, namely S.G. Mercantile P. Ltd. (1972)83 ITR, 700, cannot be made applicable to the facts of the case considering that in the said case the lease was for a period of 50 years, the property in....