9911796707
TMI Blog1996 (5) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... s for commercial purposes. It carried on the manufacturing and processing business which was closed about 35 years ago. In the course of time, the machinery was also sold out and the premises were let out to different parties for oil milling business. The quarters meant for the staff were also let out. The income accruing from the premises were all along shown and assessed as income from business. In the assessment years under reference, namely, 1976-77 and 1977-78, the assessee received, respectively, Rs. 1,35,505 and Rs. 1,05,480 as rent. This income, as usual, was claimed to be income from business. After deducting expenses of Rs. 57,692 and Rs. 33,964 the net income of Rs. 72,813 and Rs. 71,515 was returned under the head "Business inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted above. It is not in dispute that not only the business which was being carried on by the assessee in the premises in question in the past, the income from which was being shown as business income, had been closed long time back, about 35 years ago, but the plant and machinery installed in the premises in connection with the business activities had also been sold out. It is also not in dispute that the premises including the staff quarters were let out to different persons and the income returned by the assessee in the assessment years in question were rental income from the premises. On these admitted facts it is to be seen whether the Tribunal erred in holding that income from the premises is business income of the assessee and not i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated above, it is not in dispute that the business activities being carried on by the assessee in the premises were closed a long time back and that after the letting out of the premises, it was only receiving the rental income therefrom. Dealing with the case of composite letting out of building fitted with furniture and fixtures for the purpose of being run as a hotel, the Supreme Court in Sultan Brothers Private Limited v. CIT [1964] 51 ITR 353 stated that whether a particular letting is business has to be decided in the circumstances of each case, that each case has to be looked at from a business man's point of view to find out whether the letting was for business or for the exploitation of his property by the owner. It is, thus, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... started a different business of distributing films which did not require the studio building. In further course of time he dismantled the entire studio and sold out all the machinery and let out the building for being used as a cotton godown. The Madras High Court held on these facts that there was no intention on the part of the assessee to revive the film production and, therefore, the income from the building could not be called business income. In this connection it was observed : " The fact that he has dismantled and sold all the machinery installed in the studio building and the building has been let out for a cotton godown shows that the assessee had no intention to start the business in the accounting year. If the assessee had retai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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