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TMI Blog1990 (8) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,26,450 and assessed the appellant's 1/9th share at Rs. 14,050. The ITO's case was that the appellant by filing a profit loss account in respect of this income had conceded that this was business income. Similar income was earned by the appellant for the assessment years 1983-84 and 1984-85. In appeal, the Appellate Asstt. Commissioner observed that the appellant continued to reside as well as enjoy the said property. Occasionally, when it suited the convenience of the owners of the property, a portion of the same was allowed to be used for the purpose of shooting films for limited number of hours every day. The AAC held that the income received for allowing such user constituted a trading receipt. He, therefore, confirmed the assessment. Hence the present appeal by the appellant. 3. Shri S.E. Dastur, the learned counsel for the assessee, argued that the appellant had not rendered any service during the year for earning the licence fees. This was the first year in which such licence fees were earned. There was no agreement with the film producers regarding payment of licence fees. Five companies producing films avail of the facility provided by the appellant @ Rs. 5,000 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not come within the meaning of ' annual letting value ' as comtemplated u/s 23. Shri Dastur submitted that the appellant had not let out his property. He had only given it on licence for user for a limited period. Since there was no annual rent receivable, there was no question of calculating annual letting value within the meaning of section 23(1)(b). Shri Dastur then argued that this was also not business income or a commercial receipt. The appellant had not done any advertising, publicity or canvassing for earning this income. There was no agreement in this regard between the licensee and the owner of the property. Such income could also, according to Shri Dastur, never be taxed under the head " other sources ". The only clause that could apply in a case of this type was clause (a) of sub-section (1) of section 23. The ITO had already taxed the appellant on the annual letting value of the property on the basis that this was a self-occupied property. 4. In support of these arguments, Shri Dastur first relied on a decision of the Bombay High Court in the case of CIT v. Smt. T.P. Sidhwa [1982] 133 ITR 840 and the decision of the Supreme Court in the case of Nalinikant Ambalal Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cited this decision in support of his stand that under certain circumstances certain receipts were not taxable on a strict application of the provisions of the Act. In short, Shri Dastur's argument was that the income by way of licence fees was not business income because the assessee had not carried out any commercial activity like advertising, canvassing, etc. or rendered any services and was not in the business of letting out his premises. Such income was also not assessable under the head ' income from other sources ' because it would only be assessed as income from property which was the proper head since the source of earning such income was the ownership of such property. If such income was to be assessed as income from house property, licence fees could not be brought to tax on a strict application of the provisions of section 23 because the premises were not let out and the annual letting value of the premises could not be worked out with reference to the licence fees which were paid on a day-to-day basis. 5. Shri R.K. Aggarwal, the learned Sr. Departmental Representative, relying on the orders of the revenue authorities, argued that what was received by the appellant w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the appellant and the film producers in terms of which the producers are allowed use of the premises for the purpose of shooting on payment of fixed licence fees. The appellant along with other co-owners continued to stay in the property and continued to use it as his residence. The income from such property has, therefore, been rightly brought to tax on the basis of its rateable value as income from self-occupied property. No portion of the property is let out for residential purposes on a payment of rent. Therefore, what is received can never be considered as income from property. Shri Dastur's argument that such income cannot be treated as income from other sources is not tenable. The source of earning these fees is not necessarily the ownership of the property but the understanding between the film producers and the owners of the property by which they are allowed the use of the premises for a specific period of time on payment of specific fees. We may in this regard refer to some of the cases cited in the course of arguments. 8. Shri Dastur's reliance on the decision of the Bombay High Court in Smt. T. P. Sidhwa's case, in our opinion, is totally misplaced. In that c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 12 (of the old Act) does not say that an income which escapes taxation under a preceding head will be computed under sec. 12 for chargeability to tax. In the present case, the main issue to be decided is the head under which the shooting fees received can be charged to tax. Normally, such receipts would be chargeable to tax as business income. However, there is no evidence on record to support the stand of the department that any commercial or trading activity was carried on by the assessee to clothe such receipts with the nature and character of business or trading receipts. We may in this regard refer to another decision of the Supreme Court in S.G. Mercantile Corpn. (P.) Ltd.'s case. One of the principles laid down by the Supreme Court in that decision was that the residuary head of income can be resorted to only if none of the specific heads is applicable to the income in question. It comes into operation only after the preceding heads are excluded. In that case, one of its objects specified in the Memorandum of Association of the assessee-company was to take on lease or otherwise acquire and to hold, improve, lease or otherwise dispose of land, houses and other real and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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