TaxTMI 
TaxTMI 
2023 (2) TMI 293
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....ess. 3. For that the appellant craves leave to add, alter or amend any ground/s of appeal on or before hearing of the case." 2. Succinctly stated, the assessee which is a state government company engaged in the business of warehousing had e-filed its return of income for the A.Y.2014-15 on 29.09.2014, declaring an income of Rs. 4,86,61,460/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. 3. During the course of the assessment proceedings, it was observed by the A.O that the assessee company derived income from rendering various services to the persons who store their goods in warehouses. It was observed by the A.O that the warehousing charges were fixed by the assessee company as per the directions of the Central Ware Housing Corporation after considering various factors and services rendered. Holding a conviction that the aforesaid income derived by the assessee was liable to assessed under the head "Income from house property" as against that disclosed by the assessee under the head "Income from business", the A.O called upon the assessee to put forth an explanation as regards the same. In reply, it was claimed b....
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....e income from this activity has to be taxed. That the domain of the Income Tax Act, 1961. Chhattisgarh State Warehousing Corporation has been established to provide warehousing facilities to store grains and other items meant to distribution and for other purposes. The corporation has been established for this main purpose and not to undertake the business of constructing building and giving these on rent. When a particular income in this case income from letting out the warehouse is assessable under the head house property, the mere fact of appellant having business in lettering out the property by itself will not conclusively point out that the income is business income. Appellant's contention is misplaced that since warehouse constructed by the appellant are commercial asset and are constructed to expedite these commercially, therefore, income of the corporation is business income. Corporation has been constituted not to do business per-se of giving warehouses on rent but to provide warehousing facilities in the state and any income arising out of venture will be treated according to the nature of that income as defined in the Income Tax Act. It has been reiterated in several ju....
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....mplements and notified commodities; d) Act as agent of the Central Warehousing Corporation or of the State Government for the purpose of the purchase, sale, storage and distribution of agricultural produce, seeds, Manures, Fertilizers agricultural implements and notified commodities; e) To carry on other functions as may be notified. However, during the years under consideration the Corporation is doing only one business of warehousing. 7. The assessee Corporation during the course of business rendered various services to persons who store their goods in the warehousing. These are as under:- a) The proper arrangements are made for transportation inside the godown premises, loading and unloading of the goods in the premises and store it scientifically in the godowns. b) Preservation activities are carried out so the quality of goods is preserved. c) Security is provided by employing the staff. d) The goods stored in the warehouses are insured; e) In the case of loss / storage in the goods on the part of Corp. in the same is reimbursed. 8. The warehousing charges is decided after considering the size of bags, drums, tins,....
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....Income From Business" and not from "Income From House Property". Thus, in an analogical issue, there is a decision of the Hon'ble Karnataka High Court which is in favour of the assessee. We further note that the Hon'ble Supreme Court in its latest decision on this issue Chennai Properties And Investments Ltd. (supra), has considered similar issue and has also considered various other Hon'ble Supreme Court's decision on the issue including that of the Constitutional Bench judgment in the case of Sultan Brothers Pvt. Ltd. v/s CIT, [1964] 51 ITR 353 (SC). In this case, the Hon'ble Apex Court held as under:- "The appellant-assessee is a company incorporated under the Indian Companies Act. Its main objective, as stated in the memorandum of association, is to acquire the properties in the city of Madras (now Chennai) and to let out those properties. The assessee had rented out such properties and to rental income received therefrom was shown as income from business in the return filed by the assessee. The Assessing Officer, however, refused to tax the same as business income. According to the Assessing Officer, since the income was received form letting out o....
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.... the rental income that is received was to be treated as income from the house property or the income from the business. This court while holding that the income shall be treated as income from the house property, rested its decision in the context of the main objective of the company and took note of the fact that letting out of the property was not the object of the company at all. The court was therefore, of the opinion that the character of that income which was from the house property had not altered because it was received by the company formed with the object of developing and setting up properties. Before we refer to the Constitution Bench judgment in the case of Sultan Brothers (P) Ltd., we would be well advised to discuss the law laid down authoritatively and succinctly by this Court in 'Karanpura Development Co. Ltd. v. Commissioner of Income Tax, West Bengal' [44 ITR 362 (SC)]. That was also a case where the company, which was the assessee, was formed with the object, inter alia, of acquiring and disposing of the underground coal mining rights in certain coal fields and it had restricted its activities to acquiring coal mining leases over large areas, d....
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.... No doubt in Sultan Brothers (P) Ltd.'s case, Constitution Bench judgment of this Court has clarified that merely an entry in the object clause showing a particular object would not be the determinative factor to arrive at an conclusion whether the income is to be treated as income from business and such a question would depend upon the circumstances of each case, viz., whether a particular business is letting or not. This is so stated in the following words: "We think each case has to be looked at from a businessman's point of view to find out whether the letting was the doing of a business or the exploitation of his property by an owner. We do not further think that a thing can by its very nature be a commercial asset. A commercial asset is only an asset used in a business and nothing else, and business may be carried on with practically all things. Therefore, it is not possible to say that a particular activity is business because it is concerned with an asset with which trade is commonly carried on. We find nothing in the cases referred, to support the proposition that certain assets are commercial assets in their very nature:" We are conscious of th....