9911796707
TMI Blog1991 (5) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... presentative, distributor, concessionaire, del creder agent or indenting agent or perform services as such. (c) To provide, supply, maintain and operate for the benefit of any invididual, firm, society, trust, company body corporate, corporations, or Government and any person, facilities, bureaus, privileges, institutions and services including recruitment supervisory and consultative services particularly in respect of finance, personnel, administration, accounts, planning, production and research and development. The assessee-company took a shop at Chinubhai Centre, Ashram Road, Ahmedabad on rental basis. The annual rent payable by the assessee was Rs. 42,000. The assessee-company got the said shop furnished and air-conditioned. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee-company was from letting out of shops and as such the income was liable to be taxed under the head income from house property. He called upon the assessee to show cause why the income should not be assessed under said head. The following explanation was given by the assessee to the ITO: "With reference to your query as to why the income should not be treated as property income, we have to state that the company was incorporated with the above mentioned objective and for the purpose of carrying on the said business, the company had taken a shop on rental basis. In addition to providing the counter facilities, the company is also providing other services as mentioned earlier. In view of this and as the company does not own any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re directors and shareholders of the assessee-company, the company should be regarded to have been created as an intermediary stage to receive the income under the garb of service charges whereby not only the head of the income has been changed but also the co-owners had reduced their tax burden and as such it was a device to avoid tax which was not permissible as per the decision of the Supreme Court in the case of McDowell and Co. vs. CTO (1985) 47 CTR (SC) 126 : (1985) 154 ITR 148 (SC). 5. The assessee has now come in appeal before the Tribunal. The submission on behalf of the assessee is that the activity of the assessee was business activity and income had been earned as a result of such activity and as such income in question was as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... house property'. As already stated the object of the assessee company was to provide counters or rooms to the parties and to provide other facilities and services. The assessee-company after obtaining the premises on rent got them furnished and air-conditioned and formed counters and handed over the counters under agreement with the parties for providing services like collection of cash in respect of sales on each counter and handing over the said collection to respective parties, packing and delivery of goods sold to customers by various counter-holders and providing standard packing materials. For providing those services and for allowing the premises to be used, the assessee-company received commission as a certain percentage of sales. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the co-owners that this aspect might have been relevant. As far as the assessee company was concerned, it has legal existence and should be regarded as legal entity till on the basis of adequate evidence a finding was recorded that it was a fictitious company and the income belong to some other person. No such finding has been recorded. On the facts of the present case, principle laid down by the Supreme Court in the above decision would not be applicable to the assessee-company. When the assessee-company is to be taxed, what all that is required to be seen is as to what were the activities of the assessee company and what was the head of income under which the income arising from those activities would be assessable. From facts on record, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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