9911796707
TMI Blog1998 (3) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... ut at Rs. 17,595 in the status of association of persons". During the course of assessment proceedings, the assessee contended that since it did not carry on any business activity, but only let out its storage sheds and rooms and as the investments were made by nine members, in the capacity of "co-owners", the provisions of section 26 of the I.T. Act would apply and the income determined in the status of "association of persons" has to be allocated to the respective "co-owners an tax has to be levied in the individual hands. The Income-tax Officer, City Circle-VII(9), Madras, however, held that the assessee's conduct had to be necessarily taken as an "adventure in the nature of trade" and, consequently, the assessee's contention had bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that, on the facts and in the circumstances of the case, the activity carried on by the assessee in constructing sheds and godowns for purposes of leasing out them and deriving rental income therefrom on the lands taken out on lease must be construed, as an "adventure in the nature of trade" and the income derived from such trade cannot be any other than income from business, in the status of "association of persons" and in such state of affairs, to say that the income derived by the assessee from leasing out the godowns and sheds, constructed by them, has to be assessed as one in the individual hands of "association of persons", according to the proportion of their shares, pursuant to the salient provisions adumbrated under section 26 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d January 7, 1975. According to the said deed, nine parties therein took on lease some lands belonging to a third party to construct sheds and godowns thereon by contributing money in specified proportions and thereafter to let out such godowns and sheds and share the rental income from them, in proportion to their share of contribution. Pursuant to the agreement, it appears, godowns and sheds had been constructed and such godowns and sheds had been leased out and the rental income derived therefrom had been shared. The problem came in relation to the assessment of such rental income for the assessment year 1977-78. As to whether such rental income is to be treated as income from business or to be treated as income from property held by " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of the same. In such state of affairs, we have no hesitation in coming to the conclusion that the income derived from leasing of the sheds and godowns by the assessee--- association of persons---has to be treated as income from property by coowners-association of persons and is to be taxed in their individual hands in proportion to their shares, pursuant to the salient provisions adumbrated under section 26 of the Income-tax Act. In this view of the matter, both the questions are to be answered in favour of the assessee and against the Revenue and we accordingly answer them. This tax case (reference) is thus disposed of. There shall, however, be no order as to costs, on the facts and in the circumstances of the case. - - Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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