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Issues Involved:
The judgment addresses the following issues: 1. Assessment of income of the assessee-firm under 'Business income' or 'Income from other sources'. 2. Granting continuance of registration to the assessee-firm. Assessment of Income: The case involved the assessment of income of a partnership firm that had leased out a rice mill and a cinema theatre. The Income-tax Officer initially assessed the income as "income from other sources," leading to rejection of the claim for continuation of registration. On appeal, the Tribunal determined that the income from the lease activities constituted business income and allowed continuation of registration for the firm. The Tribunal's decision was based on the finding that the assets leased out were still considered commercial assets, and the firm retained an interest in the business and its equipment. The court concurred with the Tribunal's findings, holding that the income was assessable under the head "Business income." Legal Principles: The court referred to the principles outlined in CIT v. Prem Chand Jute Mills Ltd., emphasizing that the intention of the lessor to treat the leased asset as a commercial asset is crucial for determining whether the income derived from the lease is taxable under business income. The court highlighted that each case must be evaluated based on its unique circumstances, considering factors such as the terms of the lease and the intention of the lessor. Continuance of Registration: Regarding the second issue of granting continuance of registration to the assessee-firm, the court upheld the Tribunal's decision, stating that the Tribunal was correct in law in allowing the continuation of registration based on the assessment of the income as business income. Therefore, the court answered both questions in favor of the assessee-firm, affirming that the income was assessable under "Business income" and supporting the Tribunal's decision to grant continuance of registration. Costs: The court concluded by stating that in the circumstances of the case, the parties would bear their own costs related to the references.
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