TMI Blog1973 (1) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... indenture of lease in favour of Messrs. Hotels (1938) Private Ltd. with effect from 1st November, 1952, at a consolidated leasehold rent of Rs. 75,000 per annum for a period of 5 years. The entire business of Hotel Everest, its goodwill, buildings, furniture, equipments, etc., were let out to Messrs. Hotels (1938) Private Ltd. under this indenture. On the expiry of the period of the lease, the appellant resumed its business on the 1st April, 1958. Now, under section 9 of the Indian Income-tax Act, 1922, tax is payable by an assessee under the head " Income from property " in respect of the bona fide annual value of property consisting of any buildings or lands appurtenant thereto of which he is the owner, other than such portions of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e directed that a proportionate part of the assessee's rental income should be taxed under section 9 as income from house property and another proportionate part received by leasing out furniture, equipment, goodwill, etc., should be taxed under section 12. The assessee then filed a revision petition under section 33A of the Act to the Commissioner of Income-tax. On the 5th November, 1960, the Commissioner of Income-tax affirmed the Appellate Assistant Commissioner's order. Thereupon, the assessee moved this court under article 226 of the Constitution and obtained this rule on the 27th June, 1961. The rule has been disposed of by Banerjee J., on the 19th June, 1963, holding that the Commissioner's order under section 33A is an administr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (4) thereof and section 9 did not apply. Our case seems to be stronger than the case before the Supreme Court. In the instant case, the building along with furniture, goodwill, etc., were let out under the indenture of lease. The rent payable under each item has not been stated separately. The lessee in terms of the lease was to pay a consolidated rent of Rs. 75,000 per annum for the building, the equipments and the goodwill. In these circumstances, it seems to us, the Commissioner and the Appellate Assistant Commissioner were in error in applying section 9 to the proportionate part of the rent payable by the lessee. Similar conclusions, it may be noted, are reached also, in a decision of our court in Chitpore Golabari Co. P. Ltd. v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular letting is business or not depends on the circumstances of each case. And each case, as the Supreme Court points out in Sultan Brothers P. Ltd. v. Commissioner of Income-tax [1964) 51 ITR 353 (SC), has to be looked at from a businessman's point of view to find out whether the letting was the doing of a business or the exploitation of its property by an owner. But from the decisions cited above certain broad principles relevant to the facts of the instant case can be enunciated. These principles are as follows : (1) In order to be a business income within the meaning of section 10 there must be evidence of exploitation of a commercial asset. (2) Exploitation of a commercial asset does not necessarily mean exploitation by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the demised premises or any part thereof and thereupon the demise shall absolutely determine but without prejudice to the right of action of the lessee in respect of any breach of the lessor's covenants. In this agreement, the lessor has covenanted, inter alia, that it shall on the request of the lessee lay out such sum for capital investment for improvement and better carrying on of the hotel business provided an estimate of the cost of such addition to or alteration in the demised premises or purchase of any fittings, installations, plates, wares or other goods has been approved by the lessee. These clauses containing the respective covenants of the lease and the lessor and the provision for determination of the lease and right of re-en ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
