TaxTMI 
TaxTMI 
1978 (3) TMI 84
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....ernment for occupying the assessee's buildings, are taxable as receipts from the business and not as income from property, for each of the two assessment years 1960-61 and 1961-62 ? " In Miscellaneous Civil Case No. 242 of 1972, the same question has been referred by the Income-tax Appellate Tribunal, Indore Bench, Indore, from its consolidated order in Income-tax Appeals No. 3590 and 3591 of 1968-69, dated September 10, 1971, pertaining to the assessment years 1964-65 and 1965-66, with the difference that they relate to the relevant assessment years. In Miscellaneous Civil Case No. 332 of 1975, a similar question has been referred by the Income-tax Appellate Tribunal, arising out of its order in Income-tax Appeal No. 992 (Ind) of 1973-74, dated November 26, 1974, pertaining to the assessment year 1966-67. The assessee, National Newsprint and Paper Mills Ltd., Nepanagar, is a Government undertaking in the public sector, incorporated under the Companies Act, 1956, engaged in the business of manufacture and sale of newsprint. Nepanagar is a huge industrial complex. The assessee not only built residential quarters for its employees but also made available to the Government accommod....
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....cannot be brought to charge under a different head in lieu of, or in addition to, being charged under its specific head, inasmuch as the various heads of income enumerated in section 6 of the Income-tax Act, 1922, are mutually exclusive. He drew our attention to the different heads of income enumerated therein, and contends that the rent derived by the assessee by letting out the accommodation to the Government for providing facilities, like bank, post office, police station, Central excise office, etc., is nothing but " income from house property " and, therefore, falls within head (iii) of section 6 of the 1922 Act and head " C " of section 14 of the 1961 Act, namely : " Income from house property ". According to the learned counsel, since a specific head of charge is provided for income from the ownership of house property, rent or other income from ownership of house property cannot be brought to tax under any other head. Assessment under head (iii) of section 6 of the 1922 Act or head " C " of section 14 of the 1961 Act, is not only proper but obligatory. He further contends that it is not the assessee's business to let out house properties and, therefore, the rental income....
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....r of section 10 of the 1922 Act or section 28 of the 1961 Act. If section 10 of the 1922 Act or section 28 of the 1961 Act applies, then section 9 of the 1922 Act or section 22 of the 1961 Act, as well as section 12 of the 1922 Act or section 56 of the 1961 Act are necessarily excluded. When the residential quarters were built at Nepanagar, they were essential and indispensable parts of the industrial complex. Similarly, when accommodation was let out to the Government for providing certain facilities in aid of the business carried on by the assessee, i.e., for locating a branch of the State Bank of India, post office, police station, Central excise office, etc., the motivation was facility of business. This is also the finding reached by the Appellate Tribunal. We fail to appreciate the distinction that the department is trying to draw between income derived from the letting out of residential quarters by the assessee to its employees and the accommodation let out to Government for providing certain facilities in connection with the assessee's business. We find no distinction in principle between the letting of the two classes of accommodation in the facts and circumstances of t....
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....tenant's occupation is treated as landlord's occupation. The landlord's occupation through his tenant would only come to an end, when the tenant sets up a hostile title to the landlord ; otherwise the occupation of the tenant is occupation of the landlord. If both sections 9 and 10 of the Act are read together, it will be apparent that where the property is held and used for the purposes of business, income therefrom would be ' income from business' and not ' income from property '. In the present case, there can be no manner of doubt that the company holds the property in the occupation of its employees for the purpose of its business. If it be held, as was held by the judicial Member, that income from that part of the property only can be assessed under section 10 which is in the actual occupation of the assessee for the purposes of its business, this would create an anomaly because property which is admittedly the business asset of the assessee but not in the physical occupation of the assessee would not entitle him to claim depreciation thereon, while on the other hand, its income would not be treated as ' income from property '. But if the narrow interpretation placed by the j....
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....y to the entrance which permitted access to the vaults was in the exclusive possession of the assessee. 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 a 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. A canteen was also run in the premises for the benefit of the vault-holders and a telephone had been provided for them. It also maintained a regular staff, consisting of a secretary, a peon, a watchman, etc. It would, therefore, appear that the subject, which was let out or given on licence, was not a bare tenement but was a complex and preserving films, including special device facilities and services were provided. The contention of the department before their Lordships was that the income derived by the assessee was by exercise of property right properly so called and was, therefore, assessable under section 9 of the 1922 Act, while the contention of the assessee was that it was business incom....
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.... carried on by the Governors, and consists in finding tenants and having the rooms so equipped as to be suitable for letting. " Their Lordships held that the High Court was, therefore, right in holding that the assessee was carrying on an adventure or a concern in the nature of trade. In that case ([1967] 66 ITR 596, 599 (SC)) the sixth and seventh propositions, as enumerated by the High Court, were these : " 6. In cases where the income received is not from the bare letting of the tenement or from the letting accompanied by incidental services or facilities, but the subject hired out is a complex one and the income obtained is not so much because of the bare letting of the tenement but because of the facilities and services rendered, the operations involved in such letting of the property may be of the nature of business or trading operations and the income derived may be income not from exercise of property rights properly so called so as to fall under section 9, but income from operations of a trading nature falling under section 10 of the Act. 7. In cases where the letting is only incidental and subservient to the main business of the assessee, the income derived from the ....