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Issues involved: Assessment of profit on contracts in foreign exchange and assessment of rent received from tenants of business premises.
Assessment of profit on contracts in foreign exchange: The Income-tax Appellate Tribunal referred two questions of law regarding the inclusion of estimated profit on contracts in foreign exchange in the total income of the assessee. The Tribunal had assessed the profit as part of the total business income, but the assessee challenged this decision. The court considered a previous judgment where it was held that notional profit on forward contracts in foreign exchange, without actual settlement, cannot be taxed. The Revenue did not contest this position, leading the court to rule in favor of the assessee, stating that the estimated profit was not liable to be included in the total income. Assessment of rent received from tenants: The second question pertained to the assessment of rent received from tenants of the business premises. The Income-tax Officer added the rental income as income from property, rejecting the assessee's claim that it should be assessed as income from business due to close business connections with the tenants. The court disagreed with this argument, emphasizing that income from letting out property falls under "Income from house property" and cannot be claimed as "Income from business or profession." It was noted that there was no business link between the tenants and the banking business of the assessee. Therefore, the court upheld the Tribunal's decision to assess the rental income under the head "Income from house property," ruling against the assessee and in favor of the Revenue. In conclusion, the court ruled in favor of the assessee regarding the profit on contracts in foreign exchange but against the assessee concerning the rental income from tenants, affirming the assessments made by the Income-tax Appellate Tribunal.
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