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TMI Blog2015 (10) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... derived from the exploitation of the premises by TELCO and the income derived from exploitation of the commercial assets of the Assessee which are integral to the running of the business. Since the AO had not made effort to segregate such income, which in any event does not seem to be capable of being segregated, it is plain to the Court that what was being received by the Assessee from TELCO in terms of the agreement was a payment for commercial exploitation by TELCO and of the business assets of the Assessee not confined to 'house property'. It would, therefore, be erroneous to treat the entire income received from TELCO as income from house property as has been sought to be done by the AO. There is no factual basis for coming to any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s engaged in the business of procuring Mercedes trucks from TELCO on behalf of its customers. It also has a service station for servicing the vehicles and a workshop at Najafgarh Road in Delhi. The said workshop had the plant and machinery, equipment and tools. The business activities were being carried on with a number of employees and workers. 4. Disputes arose in the Sanghi family and suits were filed in this Court which were pending in the relevant time. Pending the disposal of the suits, the Assessee entered into an agreement dated 31st January 1992 with TELCO. The agreement noted that TELCO required a suitable place for service, maintenance and repairs of automobiles and having seen the premises of the Assessee at 19, Shivaji Marg, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quately insured the said premises as also such equipments, fittings or fixtures belonging to them as may be the part of the premises. vii) Any reconstruction or repairs of structural nature in respect of the said premises will be attended to by them. viii) They will be liable to reimburse or otherwise indemnify Telco in respect of any losses arising from any shortages, breakages or damages either to the vehicles in the said premises or to the staff or the equipments, machinery, fittings and fixtures of Telco therein, if such shortages or damages are attributable to the staff of Supreme Motors or to the negligence or inaction of Supreme Motors any way otherwise. 5. On its part, TELCO undertook to appoint some managerial and pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was nothing more than renting out of the premises . 8. The Commissioner of Income Tax (Appeals) [CIT (A)] in the order dated 24th October 1996 for AY 93-94 observed that the AO had not brought proper facts to substantiate the conclusion that the income should be taken as income from house property. CIT (A) observed The fact remains that the assessee has got into a temporary arrangement with TELCO for exploiting its commercial assets which could not be exploited by the company itself due to certain disputes among the directors. The company chooses to earn some income rather than keeping the commercial asset idle, not only the premises were rented out, but all other services including machineries, fixtures, tools, equipments were rented ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Assessee and whether the income derived from the property owned by the Assessee could be said to be from an activity incidental to the main business activity, on the facts of the present case, the Court does not consider it necessary to discuss those decisions. In the present case, it is plain from the agreement entered into between the Assessee and TELCO that it is the business of the Assessee as a whole that has been exploited by TELCO and not merely the business premises of the Assessee. In other words, the payment received by the Assessee from TELCO pursuant to the agreement in question is incapable of being segregated into income derived from the exploitation of the premises by TELCO and the income derived from exploitation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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