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TMI Blog1984 (10) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... rd, electricity canteen, raw materials at proper rat, technical know-how, etc., It was also obligatory for the entrepreneurs to start business within one month from the date of licensing and further if the concern is closed for more than 2 months, the company was at liberty to take possession of the shed and to let it out to others. These activities of the assessee were considered as commercial activities and accordingly income received by the assessee was treated as income from business during the asst. yr. 1976-77. However, the ITO reconsidered the activities of the assessee and was of the opinion that the assessee was deriving income from house property which could be subjected to tax under s. 22 of the IT Act, 1961. The assessee-company relied on CIT vs. National Storage (P) Ltd., (1967) 66 ITR 596 (SC), and contended that the assessee was doing commercial activities in providing facilities to the small scale industries and the assessee was not deriving rent as the owner of the property. The assessee-company was established with an object to promote and develop small scale and village industries in the State. The ITO discussed the argument made by the assessee in details and ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Jha, the senior Departmental representative, very strongly challenged the findings given by the CIT(A). He has referred to the commentary of the ld. authors Knaga Palkhivala at p. 323 and stated the situations under which the licence and/or rent can be assessed as income from house property or as income from business. After discussing the commentary of the learned authors, he also took up the case in (1967) 66 ITR 596 (SC) on which reliance was placed by the assessee on the basis of which finding was given by the CIT(A). Shri Jha referring to the earlier decisions in CIT vs. National Storage (P) Ltd. (1963) 48 ITR 577 (Bom) and 48 ITR 593 (sic) urged that if the Supreme Court decision in (1967) 66 ITR 596 (SC) is taken into consideration, the principle is clear that where the subject which is let out or given on licence is not bare tenement but is a complex one, the income cannot be said to be derived from mere ownership of house property but may be assessable as income from business. Shri Jha referring to the decision of the Supreme Court in (1967) 66 ITR 596 (SC) also discussed the meaning of the word "complex" and stated that unless it is explained that the licence money re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness was to promote industry in the State and to provide employment to the younger generation. These facts were taken into consideration by the CIT(A) and he came to the conclusion that the licence fee received by the assessee was complex one and the assessee was deriving licence fee on the utilisation of commercial assets. Dr. Pal supported the finding of the CIT(A) by placing reliance in CIT(A) by placing reliance in CIT vs. National Storage (P) Ltd. (1967) 66 ITR 596 (SC), CIT vs. National Newsprint Paper Mills Ltd. 1978 CTR (MP) 106 : (1922) 114 ITR 388 (MP) and CIT vs. Associated Building Co. Ltd. (1982) 28 CTR (Bom) 252 : 137 ITR 339 (Bom). 7. Alternatively, Dr. Pal relying in (1971) 112 ITR 547 (SC) urged that the whole of the income cannot be assessed as income from house property. 8. Shri Jha in reply to the argument of Dr. Pal reiterated the argument made by him and urged that the CIT(A) has not rightly applied the principle and the decision in (1967) 66 ITR 596 (SC). 9. The assessee-company was incorporated in 1961 by the Government of West Bengal and it is 100 per cent West Bengal Government's undertaking. The company was incorporated with a view to develop a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plot necessary for commercial complex; (3) to construct shed and building according to the needs of a particular industry; (4) To provide machines on hire purchase; (5) To provide raw-materials on no profit no loss basis; (6) To provide electricity to the industrialists after procurement from the Electricity Board and regeneration; (7) To provide roads and sanitation; (8) To provide a suitable canteen for the people working in the commercial complex; (9) To provide watch and ward for safety; (10) To provide fire equipments; (11) To provide technical know-how; (12) To see that the industry is started with in one month from the date of allotment of shed and building; (13) To see that the industry is running smoothly and in case the same is locked out for more than 2 months, the space may be allotted to some other industrialist. 11. Briefly the activities of the assessee had been indicated above which are endeared by the assessee from the various centres in the State of West Bengal. Therefore, it is clear that the assessee was not receiving the licence money just as an owner but the assessee was receiving licence money for its commercial activities ..... X X X X Extracts X X X X X X X X Extracts X X X X
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