9911796707
TMI Blog1971 (8) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... s justified in holding that the services rendered to the tenants, by supplying electrical energy, hot and cold water and maintenance of lifts and other amenities, constituted a business activity of the assessee and as such the income arising therefrom was assessable under section 10 of the Income-tax Act, 1922 ? " The High Court came to the conclusion that the income in question is income from property and as such is assessable under section 9 of the Act; that being so, the same cannot be assessed under section 10. In the result it answered the question in the negative and in favour of the department. The assessment years with which we are concerned in these appeals are 1956-57 and 1957-58, the corresponding accounting periods being the calendar years 1955 and 1956. The facts as set out in the statement of the case submitted by the Tribunal are as follows: The assessee-company owned house properties, popularly known as Karnani Mansion in Park Street, Calcutta. The said Karnani Mansion, consists of numerous residential flats and over a dozen shop premises. All those were let out to different tenants on a monthly rental basis. The tenants in respect of each of the flats a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended that the same was assessable under section 9; nor was there any dispute as regards that part of the receipt which was brought to tax under section 9. The Appellate Assistant Commissioner rejected the contention of the assessee and affirmed the decision of the Income-tax Officer. Aggrieved by the decision of the Appellate Assistant Commissioner, the assessee took up the matter in appeal to the Income-tax Appellate Tribunal, challenging the finding of the Income-tax Officer as well as the Appellate Assistant Commissioner as to the true character of that part of the receipts which had been brought to tax by the Income-tax Officer under section 12. The assessee contended that the said amount should have been assessed under section 10 and the department's case was that the Income-tax Officer had rightly assessed the same under section 12. Neither the assessee nor the department contended before the Tribunal that the same was assessable under section 9. The Tribunal accepted the contention of the assessee that the amount in question is assessable under section 10. Thereafter, at the instance of the department the question set out earlier was referred to the High Court of Calcu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and by suites of rooms as unfurnished offices. The company had no other business except the letting out and management of the one property. In addition to the rents for the offices the company derived profits from its tenants in connection with the provision of lighting, cleaning, caretaking and other services, and admitted liability to income-tax under Schedule D, with regard to such profits. The Crown contended that the company was in respect of all its activities carrying on a trade and that accordingly in computing its profits for the purposes of assessment under Schedule D, it was necessary to take into account all its receipts, including receipts from rents, an allowance being made for the amount of the assessments under Schedule A (Schedule dealt with rents of properties). Assessments under Schedule D (which includes business) were made upon the company upon this basis. The facts found were that the appellant-company was a company, the main objects of which were the acquisition, development, management, leasing and letting of land and property. Its properties were for the most part shops and blocks of offices and of flats in London, let unfurnished to tenants. The larger b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the carrying on of a trade or business in their premises, 'the trade or business', in Lord Shaw's language at page 37 'of providing, or providing for, public entertainments '. There is nothing to prevent a landlord who has been assessed under Schedule A in respect of his income as a property owner being also assessed under Schedule D in respect of a trade, business or other enterprise carried on by him on his premises." We are referring to these observations only to show that the activities of the assessee with which we are concerned in these appeals are business activities. We should not be understood as having laid down that in assessing the profits and gains of a business, the profits and gains arising from the several activities of that business can be separately computed or separately brought to tax. If the facts are as found by the Tribunal--we must assume for the purpose of this case that the facts were correctly found by the Tribunal as there was no challenge to the correctness of those findings in the question referred to the High Court--then it is quite clear that the assessee had two sources of income and not one source as found by the High Court. Mr. Manchanda, l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Manchanda was apprehensive that our decision in this case may have far-reaching effect inasmuch as the same may be considered as having laid down the rule that, whenever a premises is let out with fixtures and furnitures for a consolidated rent or when the landlord in addition to providing fixtures and furnitures also renders services incidental to the letting out of the premises and charges a consolidated rent, it may be considered that the rent realised would have to be split up and assessed separately partly under section 9 and partly under some other provision. There is no basis for this apprehension. Herein we are not considering any abstract proposition of law. We are only laying down the law applicable to the facts found. It was next urged by Mr. Manchanda that our decision in this case may preclude the department from reconsidering the correctness of the findings reached by the Income-tax Officer, the Appellate Assistant Commissioner and the Tribunal in the assessee's case in the subsequent years. This apprehension may again be not well-founded. Generally speaking, the rule of res judicata does not apply to taxation proceedings. We have not gone into the correctne ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
