TMI Blog2005 (12) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... s being let out for the purpose of enjoying the rent. The distinction between the two is narrow and one has to depend on certain facts peculiar to each case. Thus, in the instant case, the entire activity systematically undertaken by the assessee since years together is adventure in the nature of trade, therefore, liable to be assessed as 'business income' and not as 'income from house property'. We are, therefore, inclined to agree with the contentions of learned A.R., CA that pure and simple commercial assets like machinery, plant, tools, industrial assets and godowns having high business potential stands on a different footings from the assets like land and building. The hire charges income of such godowns has to be taxed under Part 'D' of Chapter IV of Income-tax Act, as income from business rather than income from house property. In the result, all the appeals of revenue are dismissed. - Member(s) : D. T. GARASIA., R. C. SHARMA. ORDER Per R.C. Sharma, Accountant Member. - These are the appeals filed by the revenue against the order of the Commissioner of Income-tax (Appeals)-II, Rajkot, dated 25-11-2004 for assessment years 1999-2000, 2000-01 and 2001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d but also from the nature of the activity actually carried out. The Assessing Officer has not disputed the fact that the assessee rents out part of the warehouse premises to various business units, charges rent on the basis of area occupied, takes insurance for the building, possesses the key, provides various services such as lighting, telephone, security and management of loading and unloading etc. 5. We have considered the rival contentions, carefully gone through the orders of lower authorities and deliberated upon the case laws cited by the ld. Authorised Representative and Departmental Representative at bar, and also the case laws discussed by the lower authorities in their respective orders, with reference to factual matrix of the instant case. From the record we found that the assessee was providing storage facilities measured in square feet on specific charges for specific period to various customers. Thus, the assessee has contractual obligation for providing different area of godowns to different persons at different time for specific period having specified charges on the basis of prevailing market rate. We also found that in addition to space in warehouse the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly use which is possible and the resultant income as a natural corollary has to be assessed under the head 'Income from business' and not 'Income from house property'. While deciding whether the assessee dealt with its property as an owner or as a businessman or a prudent man of commerce, one must see not the form which he gave to the transaction but to the substance of the matter. It will be essential to find out the user of the property and the character in which property is used. Ownership of property and leasing it out may be done as a part of business or it may be done as a land owner. Whether it is the one or the other must necessarily depend upon the object with which the act is done. If the dominant object of the leasing out is incidental to and for the purpose of assessee's business, income would be business income. What was to be discovered is whether property is subservient to the main business of the assessee. 7. From the record we also found that in the assessment year 1995-96, a revision proceedings initiated under section 263 was dropped by the CIT on the ground that warehousing income was business income and the partners of the assessee-firm was therefore, eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atic activity carried on in organized way in the field of "warehousing". As per the terms of the partnership deed one of the business to be carried on by the assessee-firm was warehousing, the assessee was providing services like electricity, telephone, watchman, staff for managing loading and unloading of goods and keeping a watch on these goods stored in the warehouse along with other services required from time-to-time by the concerned customers. Furthermore the frequency of transactions for the hire charges received by the assessee give ample indication and evidence for entire activity was in the nature of business activity. As per the nature of property also, it was only capable of commercial use. Therefore, the resultant income as a natural corollary is under the head 'Income from business' and not as the 'Income from house property'. The balance sheet of the assessee-firm also shown godown as "business asset" and not as assets of any personal investments. Income is to be classified and taxed in the hands of recipient as per different heads of income as per provisions of section 14 of Income-tax Act, irrespective of head under which the person making the payment book such exp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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