2001 (7) TMI 50 - HC - Income Tax

Summary

Issues Involved:
The issue involves determining whether rental income received by the assessee from letting out its godowns should be treated as income from property or income from business for the assessment year 1974-75.

Judgment Summary:

Issue 1: Classification of Rental Income
The Income-tax Appellate Tribunal referred the question of whether the rental income of Rs.97,316 received by the assessee from letting out its godowns should be chargeable to tax as 'Income from property' or 'Income from business'. The Income-tax Officer treated the income as from house property due to the cessation of the manufacturing business and letting out of the godowns. The Commissioner of Income-tax (Appeals) and the Tribunal upheld this view, noting the absence of business activities and intention to revive the business. The High Court concurred with the Tribunal's findings, stating that the godowns had ceased to be commercial assets and the income was rightly taxable under the head "Income from house property."

Conclusion:
The High Court upheld the Tribunal's decision, affirming that the rental income from letting out godowns should be classified as 'Income from property' due to the cessation of business activities and absence of intention to revive the business.