TMI Blog1997 (2) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... was income from other sources ?" For the assessment year 1974-75, the accounting year was the year ended September 30, 1973. The gross total income as determined by the Income-tax Officer by his order dated December 21, 1976, was Rs. 15,33,909. The Income-tax Officer had treated no part of the income as arising from business. The assessee owned plants and machinery relating to a foundry. The foundry had been leased out from 1965 onwards and during the accounting year the lessee was a subsidiary of the assessee. Before the Income-tax Officer, the assessee claimed that the lease income was income from the business. The Income-tax Officer on the ground that the foundry was leased from 1966 onwards held that the assessee had ceased to run th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery relating to the foundry in the year 1965 and the machineries were let out to the business concern. According to the assessee, the idea was to get the managing agency of the company to which the foundry machineries would be transferred in future. The fact that in the earlier years, the lease income by letting out the machinery was assessed under the head "other sources" would not preclude the assessee from contending this year that the said income should be assessed under the head "business income". According to learned counsel, the decision of the Supreme Court in New Savan Sugar and Gur Refining Co. Ltd. v. CIT [1969] 74 ITR 7, would not be applicable to the facts of this case because that decision is concerned with a company which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed lease income therefrom. The said lease income was assessed under the head other sources from the assessment year 1966-67 onwards. In the present assessment year 1974-75, the assessee claimed that the said lease income should be assessed under the head "business income". According to the assessee, the foundry machineries were later on transferred to another company. In the meanwhile the assessee was letting out the machineries to the sister concern and earning the lease income. The lessee is a subsidiary company of the assessee. The point for consideration is whether the lease income derived by the assessee by letting out the foundry machinery to a sister concern can be assessed under the head "business income" when the assessee was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in question are not in the nature of commercial assets and, therefore, the income derived therefrom cannot be assessed as business income. It is significant to note that in the present case the assessee has not mentioned that the lease income should be assessed under what business income. In New Savan Sugar and Gur Refining Co. Ltd. v. CIT [1969] 74 ITR 7, the Supreme Court held that the lease income derived by the assessee-company cannot be assessed under the head "business income". No doubt, the question of claiming the lease income to be assessed under the head "business income" did not arise in that case. But the fact remains that as per the decision of the Supreme Court, cited supra, lease hold income cannot be assessed under the hea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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