TMI Blog1994 (1) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal found that it cannot be ordinarily let out to strangers, because there will be none to take it on rent or run a factory there. The assessee-company let out that factory to its subsidiary for running a textile mill and received rent therefor. On these facts, the case of the Revenue was that the building has been let out by the assessee in its character as owner of the property and, therefore, the income should be assessed under the head "Income from property". The case of the assessee was that the property was a commercial asset and could have been exploited either by running a factory by itself or by letting it out, and since it was let out to its subsidiary for running a factory, the income derived therefrom should be treated as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee relied on the decision in CIT v. Vania Silk Mills (P.) Ltd. [1978] 112 ITR 701 (Guj) and also on the decision in CIT v. Vikram Cotton Mills Ltd. [1988] 169 ITR 597 (SC), to contend that a commercial asset could be exploited even by letting it out where the assessee is unable or finds it inconvenient to utilise it in its own business. It was also submitted that since the Revenue has not challenged the finding of the Tribunal that the asset in this case was a commercial asset, the answer to the question should be in the affirmative. The principle upon which this question was to be decided has been enunciated by the Supreme Court in Sultan's case [1964] 51 ITR 353, 358, that "whether a particular letting is business has to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the characteristic of a business activity, because it is quite obvious that the letting out of the factory to the subsidiary is only to carry on the textile manufacturing activity through the subsidiary instead of directly by itself. Since the assessee was, as found by the Tribunal, exploiting the asset indirectly through the subsidiary instead of directly by itself in the business continued to be carried on by it, this case becomes an exception to the general rule that the income from a building should be assessed only under the head "Income from property". We, therefore, agree with the view of the Tribunal that the income derived by the assessee has to be assessed under the head "Income from business". Our answer to the question is in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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