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TMI Blog2014 (11) TMI 1214X X X X Extracts X X X X X X X X Extracts X X X X ..... X APPEAL NO. 618 of 2006 - - - Dated:- 18-11-2014 - HONOURABLE MR. JUSTICE KS JHAVERI And HONOURABLE MR. JUSTICE K.J.THAKER For the Appellant : MR SN DIVATIA, ADVOCATE For the Respondent : MR.VARUN K.PATEL, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. Being aggrieved and dissatisfied with the impugned judgment and order passed by the Income Tax Appellate Tribunal, Ahmedabad Bench (hereinafter referred to as the Tribunal ) dated 21.07.2005 in ITA No. 209/Ahd/1998 for the Assessment Year 1994- 95 respectively, the assessee has preferred the present Tax Appeal for consideration of the following substantial question of law which were framed while admitting the matters: (A) Whether, on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g aggrieved and dissatisfied with the impugned judgment and order passed by the ITAT, the assessee has preferred the present Tax Appeal for consideration of the aforesaid substantial questions of law. 4. Mr. Divatia, learned advocate appearing for the appellant has drawn the attention of this Court to the profit and loss account statement and balance sheet of the assessee placed on record and submitted that the rent received from the warehouse in the case of the assessee is incidental to the business. He submitted that such income can be assessable only under the head business income and not as income from house property . 4.1 Mr. Divatia has relied upon the decision of this Court in the case of Commissioner of Income-tax vs. Sur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om business and profession. Assessee explained to the Assessing Officer that in addition to providing the premises, the assessee also provided several other facilitates; such as, services of lift, services of receptionists, secretarial services, data processing, conference room, etc. The Assessing Officer did not accept the contention and treated the income, derived from the house property. The Tribunal ultimately held in favour of the assessee and came to conclusion that, , ..the director of M/s. Saptarashi Services (P) Limited are not related to the directors of M/s. Kohinoor Tabacco Products (P) Limited. The electricity charges from October 1, 1989 to March 31, 1990, were paid to M/s. Mohanlal Hargovandas who were one of the members of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arun Patel, learned advocate for the revenue supported the impugned order passed by the Tribunal. He submitted that the Tribunal has considered the fact that the provision for security, adequate space for canteen, light and water arrangements, telephone and other facilities and providing tarred roads are incidental to the main activity of letting out of godowns for storage of fertilizers. 5.1 Mr. Patel submitted that it can be seen from the assessment order as well as the letter from Indian Potash Ltd that their requirement was semi plinth which means there were no constructed godowns and that there cannot be godowns without walls, doors and roofs. He submitted that therefore whatever the assessee earned from Indian Potash Limited canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of rent of such godowns from M/s. IPL is therefore cleraly liable to be taxed as income from property and not as income from business as claimed by the assessee. The fact that the company had rendered certain incidental services for earning such rental income would not alter the nature of such income as being assessable under the head income from house property . The provision for security, adequate space for canteen, light and water arrangements telephone and other facilities and providing tarred roads are incidental to the main activity of letting out of godowns for storage of fertilizers. M/s. IPL making payment for use of godowns for storage of fertilizers and such rental income squarely falls within the ambit and scope of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant and as such the income arising therefrom was not assessable under sec. 28 of the Income-tax Act, 1961 as business income. 7. We are in complete agreement with the reasonings adopted and findings arrived at by the Tribunal. We therefore are of the opinion that the Tribunal was justified in holding that the rental income from letting out of warehouses/godowns together with various services rendered to the occupant did not constitute a business activity of the appellant and as such the income arising therefrom was not assessable under sec. 28 of the Income-tax Act, 1961 as business income. We, therefore, answer the questions raised in the present appeal in the affirmative - in favour of the revenue and against the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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