TMI Blog2004 (6) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... year under consideration, the company let out part of the factory shed and godown to M/s Global Export for storage and packing of goods. In the return, the assessee claimed that the rental income of Rs. 1,36,000 shall be assessed under the head business. On this basis, the expenses on account of payment to the staff amounting to Rs. 96,600 and administrative expenses of Rs. 35,379 were claimed against the rental income. The AO took the view that the income should be taxed under the head property and consequently the expenses claimed cannot be allowed. The assessee pointed out that in the asst. yr. 1992-93, the rental income had been directed to be taxed under the head business by the CIT(A). The AO, apparently on the ground that the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion or lull in the business activity. It was, therefore, contended that the order of the Tribunal for the asst. yr. 1992-93, in ITA No. 3392/Del/1997, dt. 15th Jan., 2003, confirming the view taken by the CIT(A) for that year, should be applied for the year under appeal also and that the fact that in that year some business was carried on by the assessee should not make any difference to the ratio laid down in the aforesaid order. Attention was also drawn to the judgment of the Supreme Court in the CIT vs. National Storage (P) Ltd. (1967) 66 ITR 596 (SC) and the judgment of the Kerala High Court in the case of CIT vs. Malabar Pioneer Hosiery (P) Ltd. (1996) 132 CTR (Ker) 193 : (1996) 221 ITR 117 (Ker). It was pointed out that both these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with assessee's case. It appears to me to be only a case of suspension or lull in the business activity because the assessee is maintaining the staff and has also incurred expenditure on administrative expenses, and for payment and provision for the staff. The P L a/c shows that payment and provision for staff for the year amounted to Rs. 96,600, whereas in the earlier year no such expenditure had been incurred. Administrative charges of Rs. 35,379 have been incurred in the year under appeal, as against only Rs. 1,000 in the earlier year. I further find that in the earlier year there was no income by way of rent. For the year under appeal, the rental income is Rs. 1,36,000. It cannot possibly be imagined that for earning a rental income Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty for a fixed compensation. Both activities amount to exploitation of a commercial asset, the only difference being that in the former case, the assessee takes the risk of incurring loss, whereas in the latter case, he does not incur such a risk. Reference may be made in this connection to the observations of Hon'ble Justice Veera Swami in G.R. Narasimier Co. vs. CIT (1969) 73 ITR 257 (Mad). 9. For the above reasons, I hold that the Departmental authorities were not justified in bringing the rental income to tax under the head property. The same is directed to be assessed under the head business as claimed by the assessee. The AO will now examine the expenditure claimed by the assessee and take a decision regarding the allowability of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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