1951 (9) TMI 1 - SC - Income Tax

Whether or not excess profits tax is payable on the sum of ₹ 20,005 received by the respondent from Messrs. Parakh & Co. by way of rent for the dyeing plant let out to them during the chargeable accounting period?

Held that:- It was a part of the normal activities of the assessee's business to earn money by making use of its machinery by either employing it in its own manufacturing concern or temporarily letting it to others for making profit for that business when for the time being it could not itself run it. The High Court therefore was in error in holding that the dyeing plant had ceased to be a commercial asset of the assessee and the income earned by it and received from the lessee Messrs. Parakh & Co. was not chargeable to excess profits tax. The result therefore is that we hold that the answer returned by the High Court to the question referred to it by the Tribunal was wrong and the correct answer to the question would be in the affirmative and not in the negative. Appeal allowed.