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TMI Blog1964 (10) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... , etc., of the assessee is income from business assessable under section 10 of the Indian Income-tax Act or income from property assessable under section 9 of the Indian Income-tax Act?" The answer to this question would depend upon the nature of the assets in relation to the activity of the assessee. The facts stated by the Tribunal are that the assessee, which was a public limited company, used to carry on the business of pressing cotton. It owned its own cotton press. The assets of the business consisted of buildings, godowns, machinery, etc. The assessment years for which this question has arisen are 1954-55, 1955-56, 1956-57 and 1957-58 for which the respective previous years are the calendar years ended December 31, 1953, Decem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arge. If the income falls under any particular head, it has to be charged under that head. Section 9 deals with tax payable under the head "income from property", in respect of the bona fide annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business, profession or vocation carried on by him the profits of which are assessable to tax, while section 10 concerns with the payment of tax by an assessee under the head "Profits and gains of business, profession or vocation" in respect of the profits or gains of any business, profession or vocation carried on by him. Section 12 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have said earlier, the determination of this question depends upon the facts and circumstances of each case and no two cases are alike. In the case referred to, it was admitted that the dyeing plant, which was let out, was a commercial asset of the assessee, because it was a commercial asset of the assessee's business for the purposes of earning profit. This asset, i.e., the plant for dyeing silk yarn, remained idle for some time owing to difficulty in obtaining silk yarn on account of the war and later was let out and the income therefrom was sought to be included under the head Income from business". It was contended that once a commercial asset was let out and was not used by the owner thereof for a business purpose, it ceased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use of its plant and machinery can advantageously be made owing to paucity of raw materials only for six hours in a working day, and in order to get the best yield out of it, another person who has got the requisite raw materials is allowed to use it as a licensee on payment of certain consideration for three hours; can it be said in such a situation with any justification that the amount realised from the licensee is not a part of the business income of the licensor. In this case, the company was incorporated purely as a manufacturing concern with the object of making profit. It installed plant and machinery for the purpose of its business, and it was open to it if at any time it found that any part of its plant 'for the time being' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y by the assessee-firm to the company could not be held to fall within the body of the definition of "business" under section 2(5) and as the assessee-firm had, therefore, no business during the relevant period to which the Act applied, section 10A could not be invoked by the excess profits tax authorities. Das J., after noting the definition of "business" under section 2(5) of the Excess Profits Tax Act and section 2(5) of the Indian Income-tax Act and the observations of the Judicial Committee in Commissioner of Income-tax v. Shaw Wallace and Co. [1932] I.L.R. 59 Cal. 1343; 2 Comp. Cas. 276 (P.C.) that the words used in the definition of business were no doubt wide but underlying each of them was the fundamental idea o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of this case that the assessee-company, which was carrying on the business of pressing cotton, had stopped its business as early as 1950. Though it had machinery, it was not let out. On the other hand, it was decided to sell it away, and the income was sought to be earned only from the lease of its building premises. Its business activity having ceased totally, the asset was not part of the business asset. It ceased to be a commercial asset. As such the income from the rents derived by the lease of the property is an income assessable under section 9 of the Act. Let the reference be answered accordingly with costs to be borne by the assessee; advocate's fee ₹ 200.
Reference answered accordingly. X X X X Extracts X X X X X X X X Extracts X X X X
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