9911796707
TMI Blog1967 (4) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... section 12 ?" The relevant facts and circumstances are as follows : The assessee was promoted because the Government of India promulgated the Cinematograph Film Rules, 1948, hereinafter referred to as the Film Rules, according to which the distributors were required to store films only in godowns constructed strictly in conformity with the specifications laid down in the Film Rules and in a place to be approved by the Chief Inspector of Explosives, Government of India. A place at Mahim was approved and the assessee, after purchasing a plot of land there constructed 13 units thereon, 12 units meant for the members of the Indian Motion Picture Distributors' Association, who had floated the company, and one unit for Foreign Film Distributors in Bombay, who were not members of the Association. Each unit was divided into four vaults, having a ground floor for rewinding of films and an upper floor for storage of films. These units were constructed in conformity with the requirements of and the specifications laid down in the Film Rules. The walls and ceilings were of a particular width and automatic fire proof door was installed in one wall which would close immediately on the outbreak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and an annual amount was paid to the municipality towards fire services. The assessee opened in the premises two railway booking offices free of charge for the convenience of the members for despatch and receipt of film parcels. A canteen was also run in the premises for the benefit of the vault-holders and telephone had been provided for them. " A " licensees paid Rs. 40 per month while " B " licensees paid Rs. 140, per month. The Foreign Film Distributors were originally charged Rs. 300 per month but later on the charges were reduced to Rs. 100. For the assessment years 1950-51, 1951-52 and 1952-53, assessments were made on the assessee under section 10 of the Act, but for the assessment years 1953-54 and 1954-55, the Income-tax Officer took the view that the assessee should be assessed under section 9 and not under section 10. His view was confirmed on appeal by the Appellate Assistant Commissioner, who also rejected the assessee's alternative submission that the income, if not taxed under section 10, should be taxed under section 12. On further appeal to the Tribunal, there was a difference of opinion between the Judicial Member, who was the President, and the Accountant M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Act. The activity of the company in earning that income was a business activity and the source of the income, which the company obtained from the licence-holders, was not the ownership of the house property but its business." The Commissioner having obtained certificate of fitness from the High Court, the appeal is now before us. The learned counsel for the appellant, Mr. T. V. Viswanatha Iyer, has put the following propositions before us : (1) he assessee is the owner of property and has to be assessed as such under section 9 of the Act. Any incidental services rendered as owner do not alter the character of the relationship between the assessee and the users of the vaults, and there is no complexity as far as the services are concerned ; (2) In any event, assuming for a moment that certain services are rendered, they are independent of and in addition to the ownership of the property ; (3) The assessee is not carrying on any trade or business by way of letting or otherwise ; (4) The assessee is not in occupation of these vaults for the purpose of his business, and if any room is occupied by its staff, that occupation is different from the occupation by the us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee under the head 'Profits and gains of business, profession or vocation' in respect of the profits or gains of any business, profession or vocation carried on by him. " The word " business " is defined in section 2(4) to include " any trade, commerce, or manufacture or any adventure or concern in the nature of trade, commerce or manufacture." The question which really arises in the present case is whether the assessee is carrying on any business, i.e., is it carrying on any adventure or concern in the nature of trade, commerce or manufacture ? If it is carrying on any adventure or concern in the nature of trade, then section 9 specifically excludes the income derived from property from computation under section 9, if the property is occupied for the purpose of adventure or concern. Similar questions have arisen under the English Income Tax Act. Though the scheme of the English Income Tax Act is different, some of the cases throw light on the question as to " what is adventure or concern in the nature of trade ". In Governors of the Rotunda Hospital, Dublin v. Coman, the Governors of a maternity hospital established for charitable purposes were owners of a building which c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the despatch and receipt of film parcels. This, it appears to us, is a valuable service. It also maintained a regular staff consisting of a secretary, a peon, a watchman and a sweeper, and apart from that it paid for the entire staff of the Indian Motion Picture Distributors' Association an amount of Rs. 800 per month for services rendered to the licensees. These vaults could only be used for the specific purpose of storing of films and other activities connected with the examination, repairs, cleaning, waxing and rewinding of the films. But the learned counsel for the Commissioner says that section 9 applies because the assessee cannot be said to be in occupation of the premises for the purpose of any concern of its own. He says that the licensees were in possession of the vaults as lessees and not merely as licensees. But, in our opinion, the agreements are licences and not leases. The assessee kept the key of the entrance which permitted access to the vaults in its own exclusive possession. The assessee was thus in occupation of all the premises for the purpose of its own concern, the concern being the hiring out of specially built vaults and providing special services to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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