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TMI Blog1965 (1) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... these facts : The assessee, The Coringa Company Limited (in voluntary liquidation) represented by the liquidator, Kakinada, is a public limited company. The relevant year of assessment was 1950-60 for which the account period was the are which ended December 31, 1958. The assessee-company had basins in rice milling and brick manufacturing plant. For the purpose of its business, it owned a rice mill and a brick manufacturing plant. It had leased out the rice smile from about 1928, though prior to that it had worked it. The income derived from the manufacturing of bricks and from the lease of the rice mill was assessed up to 1958-59 under the head "income from business". In the year of assessment as well the return was made on that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court was of the view that "the word Business connotes some real, substantial systematic or organised course of activity or conduct with a set purpose" and that the question whether a particular source of income was business are not must be decided according to ordinary notions as to what a business was. 7. Sri Ramakrishnaiah, the learned counsel for the assessee, canvassed this very decision in his support on the ground that the assessee-company was not carrying on any business in rice milling during the assessment year. The facts in the said case were that the mills had the business of manufacture of ribbons and laces and for that purpose it owned buildings, plant, machinery, etc. During the relevant year the firm c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or alter the nature of that asset. Whatever the commercial asset produces is income of the business of which it is an asset, the process by which the asset makes the income being immaterial." 9. This approach guided the decision in that case in which the facts were : the assessee was doing the business of manufacturing silk cloth and also dyeing silk yarn. During the relevant accounting year the assessee could not work the dyeing plant had to remain idle for some time and so the assessee let it out on a monthly rent. The Supreme Court ruled that the dyeing plant did not cease to be a commercial asset merely because it could not be used as a commercial asset by the assessee himself at the time it was let out and that the rent received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipment of the cinema house. It was held that in the circumstances of the case the income which the assessee received from the lease of the theatre and its equipment was income from business and had to be assessed under section 10 of the Act and not under section 12. The principle involved was explained that : "..... an asset which was acquired or used for the purpose of a business does not cease to be the commercial asset of that business as soon as it is temporarily put out of use or let out to another person in his business or trade. It is not necessary that the commercial asset must be used only by the assessed himself in order that the yield of the income of the asset should be profit of the business of the assessee. The letting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to be lumped together and in the instant case in all the prior years the assessee firm had in fact done so. 13. In the case relied on by the learned counsel before us, Narain Swadeshi weaving Mills v. Commissioner of Excess Profits Tax, the Supreme Court adopted the ratio decidendi in Inland Revenue Commissioners v. Broadway Car Co. Ltd. There the war conditions had reduced the companys business of motor car agents and repairers to very small proportions. In that situation it was observed that the company dealt with part of its property which had become redundant and sublet it purely to produce income - a transaction quite apart from the ordinary business activities of the company. 14. For the said reasons, we cannot accede to the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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