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TMI Blog1960 (9) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and there is no dispute about the assessment. The Excess Profits Tax Officer subjected that income from lease to tax under the Excess Profits Tax Act, treating it as income from business on which alone excess profits tax could be levied. The assessee's appeal to the Appellate Assistant Commissioner was unsuccessful as the learned Assistant Commissioner held that the oil mill was a commercial asset and income therefrom was income within the meaning of the Excess Profits Tax Act. This view was upheld by the Income-tax Appellate Tribunal. At the request of the assessee the questions mentioned above have been referred under section 66(1) of the Income-tax Act read with section 21 of the. Excess Profits Tax Act for the opinion of this court. In making the reference the facts set out in the statement of the case were rather meagre and all the facts which were found or admitted and which would have enabled the court better to answer the questions referred were not stated. A supplementary paper book was therefore submitted on behalf of the assessee which contains copies of the appellate order of the Tribunal and the two orders of the Appellate Assistant Commissioner relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch 31,1946. We are not in a position to say that the statement of fact contained in the appellate order of the Assistant Commissioner is wrong. But assuming that the mill was run by the assessee himself after March 31, 1946, but before August 17, 1946, the fact does appear to be that the mill was eventually run by the assessee himself and whatever be the evidentiary value of this conduct it may have to be considered. The facts, therefore, which are available to the court are: (1) That funds for setting up the oil mills were found out of the capital employed in the assessee's flour mill business. (2) That there was no disability or incapacity on the part of the assessee preventing him from working the oil mill himself. (3) That the assessee did run the oil mill himself subsequently. There is no material or finding to support the contention that the oil mill is not connected in any way with the main business of the assessee which was admittedly that of running a flour mill. In the absence of any admitted fact or finding to prove that the oil mill was constructed with the object of letting it out on rent only, it appears difficult to resist the conclusion which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he can out of it by letting it out to be used by others, then the rent he receives is not income from any business that he carries on (p 109) When the case went up to the Supreme Court, Mahajan, J., as he then was, observed in Commissioner of Excess Profits Tax v. Shri Lakshmi Silk Mills [1951] 20 ITR 451 : The yield of income by a commercial asset is the profit of the business irrespective of the manner in which that asset is exploited by the owner of the business. He is entitled to exploit it to his best advantage and he may do so either by using it himself personally or by letting it out to somebody else . (p 455) In Commissioner of Income-tax v. Calcutta National Bank Ltd. [1959] 37 ITR 171 the Supreme Court had occasion to set out the distinction between the meaning of the word business under the Excess Profits Tax Act and the word as used in the Income-tax Act. In that case the assessee, a banking company, owned a building where its offices were located on the ground floor and a part of the sixth floor and the rest of the building was let out to tenants. The question was whether the income from rent so earned was liable to excess profits tax and could be inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was in dispute could not be considered to be a sterilised commercial asset. In the Narain Swadeshi Weaving Mill s case (supra) the court took the view on the facts of that case that the asset had ceased to be a com mercial asset. The main facts on which the decision was based were that the firm had ceased to carry on business, that the lands and buildings in which the plant and machinery had been set up had been sold to the company to whom the plant and machinery were let out, that the plant and machinery were actually used by the company which had purchased the land and buildings for its business purposes. The plant and machinery had thus been completely put out of commercial use so far as the assessee was concerned and because of the fact that it had stopped carrying on business and it had sold the land and buildings, the inference that the asset had ceased to be a commercial asset in the hands of the firm was upheld. In the instant case we are not called upon to decide as to whether a commercial asset had ceased to be a commercial asset. The question is as to whether the oil mill was a commercial asset at all. It was a new mill admittedly built during a chargeable accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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