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TMI Blog1979 (4) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... the levy of interest under s. 139(8). He did not entertain that ground in the view that no appeal lay against the charging of interest. Now, the cross-objection of the assessee is directed against the refusal of the AAC to entertain that ground and decide it on merits. At the hearing of this appeal our attention has been drawn by the learned counsel to the decision of the Andhra Pradesh High Court in the case of Dr. S. Roopkaran (1). Following the decisions of different High Courts on the same point, the Andhra Pradesh High Court held in the above case that, when the appeal before the AAC was not merely against the charging of interest but was also directed against some other aspects of the assessment, ground against the charging of interest was entertainable. This decision, being that of the Andhra Pradesh High Court, is binding on the Hyderabad Benches of the Tribunal. Respectfully following that decision, we set aside the decision of the AAC refusing to entertain the ground against the charging of interest under s. 139(8) and restore the appeal to his file for the limited purpose of rendering a decision, on merits, on that ground. This disposes of the cross-objection filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ratnam (8), we hold that the AAC was justified in upholding the claim of the assessee and deleting this disallowance of Rs. 8,411. 5. Ground No. 3 is directed against the action of the AAC in deleting the disallowance of Rs. 2,041 made by the ITO from out of the expenditure of 10,211 claimed by the assessee under the head building repairs. The assessee was owning several buildings and sheds in different industrial estates managed by it, apart from the sheds at Mallepalli in the occupation of self-employed craftsmen compendiously referred to as the `Craftsmen Guild', Mallepally. The ITO assessed the assessee's receipts from the craftsmen in occupation of those sheds under the head 'property' while the assessee had shown such receipts also as business receipts while assessing such receipts under the head 'income from property'. The ITO allowed 1/6th of the receipts on account of repairs. He erroneously assessed that the expenditure of Rs. 10,211 claimed by the assessee in the computation of its business income under the head `repairs of buildings' was inclusive of the expenditure incurred on the repairs of the sheds of the Craftsmen's Guild at Mallepalli. Since he allowed 1/6th of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same treating it as non-business expenditure is unjustified, and AAC is right in deleting the disallowance. Ground No. 3 in the appeal accordingly fails. 7. We now come to ground No. 1 in the Department's appeal. It is directed against the direction of the AAC to the ITO to assess the receipts of Rs. 1,07,300 from three sources under the head `business', whereas the ITO assessed that amount under the head `income from property'. The assessee had shown the above three receipts as part of its business receipts. It may be pointed out that the total income returned by the assessee under the head `business' in its revised return was Rs. 21,48,960. But the ITO, for the reasons stated in his assessment order, treated the above three receipts aggregating to Rs. 1.07,300 as income from house property and assessed it as such. After allowing Rs. 17,863 (1/6th) for repairs, he assessed the net income of Rs. 89,437 under the head "income from property". 8. On appeal, the AAC reversed the decision of the ITO on this point. He held that the above receipts were not from bare letting out of the property and that the operations involved in the activity from which the amount was realised were t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some more sheds (unelectrified) which had been let out to some other technocrats. Infrastructural facilities like roads, water supply, power, banking facilities etc., were provided by the assessee to the technocrats in the Estate. Apart from establishing the industrial estates, the assessee has been engaged in diverse activities, all for the purpose of effectuating the main object of promoting small scale industries within the state. The main sources of its income, we are told, are :- (1) interest on loans given to entrepreneurs: (2) profit from supply of raw material to entrepreneurs at its raw material servicing centres at various places: (3) income from its own production units: (4) income from certain government production units handed over to it for management. 11. All the above activities of the assessee are admittedly business activities and the income from those activities is assessed as business income. For the year under consideration its taxable income under the head 'business' was Rs.21,24,367 as can be seen from the assessment order. It was in the year 1970 that the assessee conceived the idea of establishing at Mallepally in Hyderabad what was called Crafts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion in their entirety were rightly assessed under the head 'income from property'. It is also the submission of Shri Satyanarayana that income earned from house property is liable to be assessed as such and not as business income even if the house property is the business asset or the stock-in-trade of the assessee. For this proposition he has cited the following decisions: (i) United Commercial Bank Ltd. vs. CIT (10) (ii) Sultan Bros. vs. CIT (11) (iii) Indian City Properties Ltd. vs. CIT (12) (iv) CIT vs. Indian Bank Limited (13) 14. Shri Devadas, learned authorised representative of the assessee, has contended, on the other hand, that the construction of the sheds and the provision of infrastructural facilities therein to craftsmen and other entrepreneurs are part of the business activities of the assessee and they are in furtherance of its objects as set out in cl. (3) of the memorandum of association. Particular reference is made to sub-cl. (Ii) of Clause (3), under which provision of accommodation to entrepreneurs is also one of the objects of the assessee. It is further urged by Shri Devadas that the receipts in question are not for the bare letting out of the sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng is inclusive of certain additional services such sanitation, lighting, cleaning etc., which are relatively insignificant and only incidental to the use and occupation of the tenants. But the position is different where the income received is not from bare letting of the tenement or from the letting accompanied by incidental services or facilities. But the subject 'hired' is a complex one and the income obtained is not so much because of the bare letting of the tenements but because of the facilities and services rendered, the operations involved in such letting of the property may be of the nature of business or trading operations. In such a case the income derived is liable to be assessed under the head 'business'. The above prepositions emerge from the decision of the Supreme Court in CIT vs. National Storage Pvt. Ltd.(14) affirming the decision of the Bombay High Court in the same case (45 ITR 577). 16. In the present case, the facts and circumstances do not go to show that the receipts represented the income from the mere exercise of property rights over the sheds by the assessee, and it does not appear that the services rendered by the assessee to the craftsmen are merely ..... X X X X Extracts X X X X X X X X Extracts X X X X
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