TMI Blog1979 (11) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether, on the facts and in the circumstances of the case, the income returned by the assessee should be assessed as income under the head 'Business' or under the head 'Other sources'?" The assessee-firm was originally constituted under a partnership deed dated 8th March, 1965. There were changes in the constitution, and, therefore, another deed was drawn up on 22nd December, 1967. The firm was registered for the assessment year 1967-68 and the registration was continued for 1968-69. For the assessment year 1969-70, the assessee filed the application for registration in Form No. II and Form No. II A before the ITO on October 15, 1968. The ITO was of the view that under para. 2 of the partnership deed dated 22nd December, 1967, the main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and ascertain whether there was any business carried on by the assessee-firm as provided under that Act. In the Tribunal's view, the letting of the leasehold property could be considered an occupation within the meaning of s. 2(b), and it was, therefore, held that the assessee was carrying on business as contemplated by the Partnership Act during the year. With regard to the objection of the assessee to the assessment of the income realised from the tenants, under the head "Other sources ", the Tribunal rejected it and confirmed the order of the AAC. According to the Tribunal, the activity of subletting the premises would not come within the scope of s. 2(13) of the I.T. Act, 1961. Against the order of the Tribunal, there were two refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be assessed under the head "Business". In the course of the judgment, it was observed: " The I.T. Act divides income under separate heads for the purpose of enabling assessment being made after giving the particular deduction available under the respective provisions. The classification of various heads of income under the I.T. Act is only for the purpose of convenience of administration of that statute. The concept of business as envisaged under the I.T. Act cannot be imported into the determination of the question as to whether a group of individuals do, by agreement, carry on business as a firm. Under s. 2(23) of the I.T. Act, the expressions 'firm', 'partner' and 'partnership' have the meanings respectively assigned to them in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrabalu Chetty Street, and put up constructions as annexe to the old building and let them out to various tenants. Under the terms of the agreement of lease, the building newly put up by the assessee would also have to be surrendered to the lessor after the expiry of the lease period. The assessee had no manner of right over the building at the termination of the lease. The total amount realised as and by way of rent came to Rs. 95,785 and there were also receipts towards amenities to the extent of Rs. 1,800. Taking into account these features of the present case, it is clear that the assessee conceived of taking the building on lease and subletting it only as a business activity. It is not a case where a house owner is letting out the flat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13) of the I.T. Act. It is an inclusive definition. There must be some trade, commerce or manufacture or any adventure in the nature of trade, commerce or manufacture. There is no manufacture in the present case and subletting a property cannot be considered to be a trade in its popular or commercial sense, There is not much of a discussion in the Tribunal's order as to the nature of the activity that was carried on by the assessee. The assessee's activity is not like that of a mere property owner because the assessee did not own the property. Hence it cannot be property income. In order to constitute business, as already seen, there must be something in the nature of trade, commerce or adventure or something akin to it. In the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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