Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2015 (5) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (5) TMI 432 - HC - Income TaxTreatment to the rental income from letting out of the godowns - business income or income from property - Tribunal confirmed the order of the CIT(Appeals) holding that so long character of the godown is retained as a godown, it should be treated as a commercial asset and its rental income must be treated as an exploitation of commercial asset in the nature of trade - Held that:- In the present case, the main business of the assessee was the export of tobacco and for that purpose they had constructed godowns. As submitted by the learned counsel for the assessee, the assessee would let out the godowns when they would not require the same and earn rental income therefrom. Apart from letting out the godowns, no other services/amenities, admittedly were extended by the assessee to the lessees. Merely because one of the objectives, in the partnership deed, was to let out the godowns would not mean that the assessee had undertaken the activity of construction of godowns and letting them out as business activity. Moreover, it is not the case of assessee that letting out of the godowns was continuous activity from year to year. Therefore, in our opinion, the income received by the assessee, by way of rent, was the income received from property and it would not fall under the head income from business. The character of the income would not stand altered because it was received by the firm with one of the objects of the partnership deed to let out their godowns. The income derived from letting out the property, in the facts of the present case, would not amount to profits or gains from the business. In other words, the income earned by letting out the godowns cannot be termed or treated as income from business. From the facts of the present case, it is clear that the assessee could let out their godowns only because those were not in use at the relevant time. Therefore, the rent received by the assessee would have to be computed as income from property. - Decided in favour of the Revenue
|