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Issues involved: Determination of the appropriate category for assessing income derived from letting out a building along with chairs, mike, etc., on the occasions of marriage and other functions.
Summary: The High Court of Madras addressed the issue of categorizing income derived from letting out a building along with additional facilities for events such as marriages and functions. The assessee, a charitable institution, claimed that such income should be assessed under the head "Income from business," while the Revenue argued it should be categorized as "Income from house property" or "Income from other sources." The Tribunal supported the assessee's position, considering it as income from a business activity carried out by the assessee. The Revenue contended that income derived from letting out a property should be taxed under "Income from house property" based on the rentals received, citing the decision in Sultan Brothers v. CIT [1964] 51 ITR 353. However, the court noted that each case must be examined from a business perspective to determine if the letting out constitutes a business activity or property exploitation by the owner. Referring to previous judgments, including CIT v. Admiralty Flats Motel [1982] 133 ITR 895 and CIT v. National Storage Private Ltd. [1967] 66 ITR 596, the court emphasized that income from letting out properties for events can be considered business income. It highlighted the case of CIT v. Associated Building Co. Ltd. [1982] 137 ITR 339 (Bom), where letting out an auditorium with services was deemed a business activity. The court concluded that the assessee's activity of making the building available for events, charging for additional facilities, and retaining control over the premises constituted a business aimed at earning income. Therefore, the income derived from such activities was rightfully categorized as business income. The court ruled in favor of the assessee, affirming the Tribunal's decision and rejecting the Revenue's argument. In conclusion, the High Court of Madras determined that income generated from letting out a building with additional services for events falls under the category of business income, supporting the assessee's position over the Revenue's claim.
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