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TMI Blog2016 (8) TMI 903X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant-Revenue and against the assessee and an order of remit is passed to the tribunal to decide the issue in question afresh and give a finding on the nature, character and type of letting, examine the contentions of the parties with reference to the material on record including the written submissions made by the assessee as well as the lease and maintenance agreement dated 25th August, 2000. Thereafter, the tribunal should apply the legal ratio, as expounded by the Supreme Court in the case 'of Universal Plast. Ltd. (supra). The first question is therefore not required to be answered." 2. The only issue that needs to be consider is in respect of factual aspect of lease agreement, and the nature of income derived from such agreement. On perusal of the judgement of Hon'ble High Court in assessee's case, it is observed that Hon'ble High Court has directed the issue to be considered in the light of ratio expounded by Hon'ble Supreme Court in the case of Universal Plast Ltd. Vs CIT reported in 237 ITR 454. 3. It is observed form the records placed before us that the assessee is engaged in the business of indenting and trading of import and sales of timber. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing let out for the purpose of enjoying the rent. The distinction between the two in a narrow one hand has to depend on certain facts peculiar to each cases. Pure and simple. Commercial, asset like machinery, plant, tools, industrial sheds on godowns having high business potential stand on a different fooling from assets like land or building. iv) If an assessee derived income from a commercial assets which is capable of being used as a commercial asset, then it is income from his business. Whether he uses that commercial asset himself for lets it out to somebody else to be used. The asset would not cease to be commercial asset simply because temporarily it was put out of use or it was let out to another person for his use. v) So long as the Commercial asset is capable of being exploited as such, its income is business income irrespective of the manner in which the asset is exploited by the owner of the business. He entitled to exploit it to his best advantage and be may do so either by using it himself personally or by letting it out to somebody else. (vi) If the commercial asset is not capable of being used as such or as a commercial asset, then its being let out to other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rily for a period of 3 years, except for one room on the first floor which was retained by the assessee, which contained the machinery used for printing press activity. 4.2 If we apply the tests laid down by the Supreme Court in Universal Plast Ltd.'s case (supra), to the facts of the present case, we find that all the assets of the business were not rented out by the assessee-company. It was doing the business of trading of import and sale of timber during the period when the branch office was being shifted. In the interest of the company, it decided to let out the property to M/s. ALS Ltd., by way of exploitation of business assets, for making profit. The asset was let out, while carrying out other business activity. There was nothing on record to show that the assessee had sold away the properties or abandoned its business. In the circumstances, in order to exploit business assets, assessee shifted its Branch Office. In this commercial venture, the assessee received a higher income regularly from its commercial assets, which was used to maintain the premises. There is no dispute that the property under consideration, is not capable of being used only as a commercial asset. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of ITO Vs Ultra Vision Associates, for the Assessment Year 1010-11 New Delhi 2011-12. This Tribunal vide order dated 09.03.2016, on similar facts, has allowed the claim of rental income to be taxed under t he head 'income from business' by relying upon the decision of Hon'ble Supreme Court in the case of Universal Plast Ltd. (supra). The Hon'ble Supreme Court in Universal Plast Ltd. (supra), has held that if business assets are let out temporarily while assessee is carrying out other business activities, then it is the case of exploiting of business asset otherwise than employment of them for his own use for making profits for their business. The ratio has been followed in various decisions which are as under: i) Scientific Instrument Co. Ltd. Vs CIT 14 Taxman.com 157 (2011) (Alld.) ii) CIT Vs New India Industsries Ltd. 201 ITR 208 (Guj.) iii) Vyline Glass Works Ltd. 20 Taxman.com 32 iv) Narayan Maket Complex Vs ITO 21 Taxman.com 325. 5. We find that one of the activities of the assessee was of printing press and the assets let out by the assessee were used to carry on the activity of printing press. The property has been temporarily leased to M/s. AFL Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther business activities. There was nothing on record to show that the assessee had sold away the properties or abandoned its business activities. In the circumstances, in order to exploit business assets, as a prudent business decision, the assessee took interest free loan from the City Bank, rented out, one of its properties to it, and shifted its Regional Office. In this commercial venture, the assessee received a higher income regularly from its commercial assets .... ". 5.5 Subsequently, Hon'ble Gujarat High Court in the case of CIT Vs New India Industries Ltd. reported in 201 ITR 208 has held that the property let out by assessee was a commercial asset which could only be exploited commercially and therefore, the income earned was treated as business income. Further, Hon'ble Calcutta High Court in the case of Shyam Burlap Co. Ltd. Vs CIT reported in (2016) 280 ITR 151 has taken a view that when the object in memorandum permitted the assessee to carry on business in letting out properties and when 85% of the income was by way of deriving rent from lease, the income from letting was considered as business income of the assessee. 5.6 Respectfully following the judicial decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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