1982 (4) TMI 37 - HC - Income Tax

Summary

Issues involved: The judgment involves the following issues: Ownership of a flat used for business purposes, accrual of income from the flat, eligibility for rebate from super-tax based on engagement in manufacturing or processing of goods.

Ownership of Flat:
The assessee, engaged in construction business, was held to be the owner of a flat in a building, used for business purposes. The Tribunal confirmed that the assessee was using the flat for its business activities, allowing deductions for municipal taxes and depreciation, and deleting the addition of gross annual value as income from other sources.

Accrual of Income from Flat:
The Tribunal disallowed a rebate from super-tax claimed by the assessee, stating that the business did not qualify as wholly or mainly engaged in manufacturing or processing of goods. The Commissioner raised questions regarding the Tribunal's findings on ownership and accrual of income from the flat, which were resolved in favor of the assessee based on a previous court decision.

Eligibility for Rebate from Super-Tax:
The main contention was whether the assessee's construction business could be considered as wholly or mainly engaged in manufacturing or processing of goods to qualify for a rebate from super-tax. The court analyzed relevant provisions of the Finance Act, 1964, and compared the activities of the assessee with precedents. It was concluded that the construction activity, though involving some processing of goods, was ancillary to the main business of construction and did not qualify the assessee for the rebate.

Conclusion:
The court answered the questions in favor of the assessee regarding ownership and accrual of income from the flat, but against the assessee on the eligibility for the super-tax rebate. The judgment highlighted that the construction business, despite involving some processing activities, did not primarily engage in manufacturing or processing of goods to qualify for the rebate. The respondent was directed to pay half of the costs of the reference.