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TMI Blog2020 (2) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... Unit No. 609 at Kohinoor City Mall at Kurla having carpet area of 3082.71 sq.mtr. equivalent to 286 sq.mtr on 6th floor with 4 covered parking was bought on 26th October, 2009 from M/s Kohinoor Planet Construction Pvt. Ltd. During the year under consideration the rental income is declared under the head "income from business/profession" in the return filed. During the assessment proceedings the AR of the assessee vide ordersheet noting dated 09/12/2016 was specifically asked when the assessee is the owner of the property, why the rental income should not be treated as income from house property u/s 22 of the Act and to show cause as to why an amount of Rs. 4,16,160/- should not be treated as rental income and not business income. The assessee submitted copy of purchase agreement of the property and contended vide letter dated 19/12/2016 that the assessee firm was engaged in the business of renting the commercial property during the year and in the return filed, the income from renting property is disclosed under the head income from business. There is no other income earned by the assessee. The asset is a commercial asset and the income received is on account of commercial exploita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Profits Tax Act is the same as the definition of a business in section 2(4) of the Indian Income-tax Act. Whether a particular activity amounts to any trade, commerce or manufacture or any adventure in the nature of trade, commerce or manufacture is always a difficult question to answer. On the one hand it has been pointed out by the Judicial Committee in Commissioner of Income-tax v. Shaw Wallace & Co. ((2932) IL.R. 59 Cat 1343), that the words used in that definition are no doubt wide but underlying each of them is the fundamental idea of the continuous exercise of an activity. The word "business" connotes some real, substantial and systematic or organised course of activity or conduct with a set purpose. On the others hand, a single and isolated transaction has been held to be conceivably capable of falling within the definition of business as being an adventure in the nature of trade provided the transaction bears clear indicia of trade. The question, therefore, whether a particular source of income is business or not must be decided according to our ordinary notions as to what a business is. The case of Commissioner of Excess Profits Tax Bombay City. Shri Lakshmi Silk Mills L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivities of the company. The ratio decidendi in that case which was noticed in the judgment of this Court appears to us to apply to the facts found in the present case apart from the findings under section 10A. Applying also the common sense principle to the fact so found it is impossible to hold that the letting out of the plant, machinery, etc., was at all a business operation when its normal business activity had come to a close, ti is interesting to note that sub-sections (3) and (4) of section 12 of the Indian Income-tax Act recognise that letting out of plant, machinery, etc., may be a source of income falling under the head ''other sources" within that section and not necessarily under the head "business" dealt with in Section 10 of that Act. In the facts and circumstances of this case, therefore, the letting out of the plant, machinery, etc,, cannot be held to fall within the body of the definition of "business" under section 2(5) of the Excess Profits Tax Act In this view of the matter it is not necessary for us to express an opinion as to the meaning or implication of the proviso to that definition or rule 4(4) of Schedule I to the Act. In our opinion, in the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid properties and earning income by letting out those properties is the main objective of the company. It may further be recorded that in the return that was filed entire income which accrued and was assessed in the said return was from letting out of these properties. It is so recorded and accepted by the assessing officer himself in his order. (Para 5) We are conscious of the aforesaid dicta laid down in the Constitution Bench judgment It is for this reason, we have, at the beginning of this judgment, stated the circumstances of the present case from which we arrive at irresistible conclusion that in this case, letting of the properties is in fact is the business of the assessee. The assessee therefore, rightly disclosed the income under the Head Income from Business. It cannot be treated as 'income from the house property'." 11. In the case of Rayala Corporation (P) ltd. V. ACIT (2016) 386 ITR 500, Hon'ble Supreme Court held as under: Facts:- The assessee company was in the business of renting its properties and was receiving rent as its business income. The assessee-company claimed that the said income should be taxed under the head 'Profits and gains ..... X X X X Extracts X X X X X X X X Extracts X X X X
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