TaxTMI 
TaxTMI 
1991 (5) TMI 93
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.... sole or otherwise, to act as sales representative, distributor, concessionaire, del creder agent or indenting agent or perform services as such. (c) To provide, supply, maintain and operate for the benefit of any invididual, firm, society, trust, company body corporate, corporations, or Government and any person, facilities, bureaus, privileges, institutions and services including recruitment supervisory and consultative services particularly in respect of finance, personnel, administration, accounts, planning, production and research and development. The assessee-company took a shop at Chinubhai Centre, Ashram Road, Ahmedabad on rental basis. The annual rent payable by the assessee was Rs. 42,000. The assessee-company got the said s....
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.... 3. The ITO was of the opinion that income of the assessee-company was from letting out of shops and as such the income was liable to be taxed under the head income from house property. He called upon the assessee to show cause why the income should not be assessed under said head. The following explanation was given by the assessee to the ITO: "With reference to your query as to why the income should not be treated as property income, we have to state that the company was incorporated with the above mentioned objective and for the purpose of carrying on the said business, the company had taken a shop on rental basis. In addition to providing the counter facilities, the company is also providing other services as mentioned earlier. In vi....
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....erved that since the co-owners of the property were directors and shareholders of the assessee-company, the company should be regarded to have been created as an intermediary stage to receive the income under the garb of service charges whereby not only the head of the income has been changed but also the co-owners had reduced their tax burden and as such it was a device to avoid tax which was not permissible as per the decision of the Supreme Court in the case of McDowell and Co. vs. CTO (1985) 47 CTR (SC) 126 : (1985) 154 ITR 148 (SC). 5. The assessee has now come in appeal before the Tribunal. The submission on behalf of the assessee is that the activity of the assessee was business activity and income had been earned as a result of s....
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....not have been assessed under the head 'income from house property'. As already stated the object of the assessee company was to provide counters or rooms to the parties and to provide other facilities and services. The assessee-company after obtaining the premises on rent got them furnished and air-conditioned and formed counters and handed over the counters under agreement with the parties for providing services like collection of cash in respect of sales on each counter and handing over the said collection to respective parties, packing and delivery of goods sold to customers by various counter-holders and providing standard packing materials. For providing those services and for allowing the premises to be used, the assessee-company rece....