TMI Blog1976 (7) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... he P.M. Academy School was rightly held to be not assessable under section 28 of the Income-tax Act, 1961, as income from business and assessable only under section 56 as income from other sources? (2) Whether, on the facts and in the circumstances of the case, the claim of the assessee that it was a partnership firm carrying on business and consequently entitled to registration under section 185 of the Act was rightly rejected?" The relevant assessment year is 1969-70, corresponding to the previous year ending with March 31, 1969. The assessee made a return of income showing the status as that of a partnership firm and also applied for registration under section 185 of the Act. In support of the claim of registration a deed of partners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y". Yet he accepted the finding of the Income-tax Officer that the assessee did not carry on any business and, therefore, was not entitled to registration of any firm under section 185 of the Act. He directed that the income in the hands of the assessee be treated as income from other sources. In second appeal by the assessee, it was claimed that the assessee was carrying on the business of building contractors and the income received by letting out shops arose in the course of such business and, therefore, should have been assessed as income from business under section 28 of the Act. It was further claimed that the firm being a genuine one and all other requisites having been satisfied, registration should have been granted. The Appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siduary head, unless and until an income does not come under the first five classifications, it cannot be treated to be under the residuary head. According to assessee's counsel, the income in this case is squarely business income within the ambit of section 28 of the Act and thus the conclusion of the appellate authorities based upon a non-existent hypothesis of lack of intention is an erroneous conclusion in law. Section 2(13) of the Act defines "business" to include- "........ any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture." When a word is defined to mean something, the definition is prima facie restrictive and exhaustive as was indicated by the Supreme Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the same word in section 2(b) of the Indian Partnership Act, 1932. Authorities have interpreted the word "business" appearing in the Partnership Act in the same strain. Rangnekar J. in the supplementing judgment in the case of Commissioner of Income-tax v. National Mutual Life Association of Australasia Ltd. [1933] 1 ITR 350, 361 (Bom) observed: "The word 'includes' in the interpretation clauses is intended to be enumerative and not exhaustive and it has an extending force and does not limit the meaning of the term." Tested on such basis, the activity undertaken by Narasingha under the agreement with the Headmaster was certainly not outside the ambit of business. It is not the case of the revenue nor does learned standing counsel ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a business or the exploitation of his property by an owner. We do not further think that a thing can by its very nature be a commercial asset." This appears to be the true test. When the facts of the case in hand are tested this way, we think the only conclusion that can reasonably be reached is that the arrangement envisaged by the agreement between Narasingha and the school was a "business undertaking". It is not correct that a vacant site was taken on lease with a stipulation to construct thereupon. The school never intended to lease out a site. On the other hand, the decision of the managing committee of the school was to construct rooms and for that purpose, the agreement had been entered into with Narasingha. Narasingha undertook ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
