2008 (4) TMI 378 - AT - Income Tax

Summary

Issues:
- Whether warehousing income should be treated as business income or property income.

Analysis:
The appeals by the Revenue were against the CIT(A)'s orders for various assessment years, all revolving around the treatment of warehousing income. The Revenue contended that the income should be classified as property income based on a decision of the Hon'ble Madras High Court. They argued that expenses were covered by deduction under s. 24 and compared warehousing income to hotel room rental income. On the other hand, the assessee's counsel emphasized that the warehouses were used for storing goods, not letting out space, and the assessee provided various services along with storage. The AO's inspection report confirmed the nature of activities at the warehouses, supporting the assessee's position. The Tribunal noted that the income source was the storage facility, not the letting of space, distinguishing it from the case cited by the AO.

In a separate judgment by the apex Court in CIT vs. National Storage (P) Ltd., it was held that providing specialized services along with storage constituted an adventure or concern in the nature of trade. The Court emphasized the occupation of premises for the concern's purpose, which aligned with the assessee's situation. The Tribunal agreed with the CIT(A)'s reliance on this judgment, stating that the assessee's provision of storage facilities, loading/unloading services, and security constituted income from the business. Unlike income from house property, which requires property letting, the assessee's case involved entrusting goods for storage, not leasing space. Therefore, the Tribunal dismissed the Revenue's appeals, upholding the CIT(A)'s orders in favor of treating the warehousing income as business income.

In conclusion, the Tribunal's detailed analysis considered the nature of activities, the distinction between property income and business income, and relevant legal precedents to determine the classification of warehousing income. The decision highlighted the importance of the services provided along with storage in defining the income source and upheld the treatment of the income as derived from the business activities of the assessee, not from property letting.