TMI Blog2010 (2) TMI 397X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of the transaction since it was for the Tribunal to determine as to whether the transaction was a bare letting out of the asset or whether the assessee was carrying on a commercial activity involving warehousing operation. - 1269 of 2007 - - - Dated:- 18-2-2010 - CHANDRACHUD D. Y. DR., DEVADHAR J. P. JJ. S.N. Inamdar with Atul K. Jasani for the appellant. Vimal Gupta for the respondent. JUDGMENT 1. The appeal in the present case arises out of an order passed by the Income-tax Appellate Tribunal on August 31, 2006, pertaining to the assessment year 2001-02. The appeal was admitted on the following questions : I. Whether on the facts and in the circumstances of the case the Tribunal was justified in law in holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acent to the warehouse, a factory has been constructed by the assessee and a lease has been executed on March 18, 2001 in favour of Hindustan Lever Limited. The lease agreement was for a period of ten years on a monthly rent of Rs. 4.45 lakhs. The lessee agreed to pay to the assessee as lessor an amount of Rs. 144 lakhs on taking possession as a security deposit and certain other sums on the commencement of the fourth and seventh years of the lease. The assessee agreed to allow the lessee to possess and enjoy the premises for carrying out manufacturing activities including blending, processing, mixing and packing of tea and other items of food and beverages. The lease was renewable on the option of the lessee upon such terms as may be mutua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been received as income from house property. In appeal, the Commissioner of Income-tax (Appeals) confirmed and enhanced the assessment such that even the warehousing charges came to be treated as income from house property. A disallowance made by the Assessing Officer under section 40A(ii) on the assumption that the income was income from business was confirmed. In appeal the Tribunal has upheld the order of the Commissioner of Income-tax (Appeals) in its entirety. 4. The submission of counsel appearing on behalf of the assessee is that in the case of the assessee on the same set of facts the income which was received from the entirety of the activities was assessed as income from business for several years. In these circumstances, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is to exploit a commercial asset by carrying on a commercial activity, the income that is received would have to be treated as income from business. What has to be deduced is to whether the letting out of the property constitutes a dominant aspect of the transaction or whether it was subservient to the main business of the assessee of carrying out warehousing activities. 7. The first submission which has been urged on behalf of the assessee, to the effect that the decision of the Tribunal rendered on March 19, 2001 for the assessment years 1994-95, 1995-96 and 1996-97 ought to have been considered, but has not been considered by the Tribunal, cannot be brushed aside as without substance. Be that as it may, during the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be assessable as business income and the second in the case of V. N. Rukari v. ITO in I. T. A. No. 84/PN/2001 in which the Tribunal held that the income which was realized from warehousing activity would be assess-able as income from house property. The Tribunal followed a decision of the Madras High Court in CIT v. Indian Warehousing Industries Ltd. [2002] 258 ITR 93 and was of the view that the facts of that case were identical, in holding that the income received from the leasing of the ware-house was assessable as income from house property. Ex facie, therefore, the terms of the warehousing agreement were not considered by the Tri-bunal. Merely styling an agreement as a warehousing agreement would not be conclusive of the nature of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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