9911796707
TMI Blog1987 (11) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... oad, Kiderpore, Calcutta. These properties were not owned by the assessee. 15, Noormal Lohia lane was owned by the "Estate of Jewan Lal Deggar". As per the assessee's letter dt. 22nd May, 1984 the assessee constructed some sheds on the tenanted land owned by the "Mookherjee Estates Pvt. Ltd." for its use as storage. etc. These sheds were for some time and the assessee allowed certain known parties to use a portion of those sheds on licensing basis with clear undertakings that the licence will vacate the sheds if they are required by the assessee. The ITO was of the opinion that the income from the license fees was income of the assessee to be treated under the head "Other Sources" and not under the head "Business". Accordingly, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as manufacture of special type of ropes and order supply. The ITO also found that the assessee had required show room and storage facilities for its own raw materials and finished product but during the period relevant for this assessment year and some earlier years the assessee did not utilise this extra space i.e. premises aforesaid but sub-let it. That sub-letting receipts or license fee had no connection with its normal business activities and had got no nexus with its business activities. Since the assessee was not the owner of the properties the ITO assessed the same as income from "Other Sources". In the assessment order the ITO mentioned the details of Rs. 1,92,480 as under: "Service charge realised in respect of shop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oitation of assets? It has been established that depending upon the facts the answer to the above mentioned questions would decide as to whether an income from letting out of building etc. would constitute rent or business income. In the present case on the facts and circumstances, I am of the opinion that the purpose of the assessee was not enjoyment of rent. In this view of the matter the ITO is directed to treat the income from licensing fees amounting to Rs. 1,92,480 as income from business under s. 28 of the IT Act. Necessary relief available to the appellant may be worked out accordingly." Against the said order of the CIT(A) the Revenue preferred the present appeal. 4. The arguments of the departmental representative were to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... godown at Satya Doctor Road, Calcutta was let out to Kidderpore Warehousing Corporation and City Services and in the year of account the assessee realised Rs. 1,38,480. This amount was termed as licence fees by the assessee. In this activity by letting out a part of the godown, the assessee has not carried on any business. According to the decision of the Madras High Court in CIT vs. Lakshmi Company (1982) 133 ITR 904 (Mad) to constitute business, there must be some trade commerce or manufacture or any adventure in the nature of trade commerce or manufacture and sub letting a property cannot be considered to be a trade in its popular or commercial sense. In the assessees' case the surplus space in the godown was let out by the assessee. So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as "Service Charges" and treated this amount as business receipts as in all earlier years. The ITO, however, for the first time assessed this amount as income under the head "Other Sources". It may be noted that all along up to the asst. yr. 1981-82, the said receipts have been assessed as business profits under s. 28 of the IT Act. The assessee company took, on monthly rent, certain vacant lands from Mookerjee Estates Pvt. Ltd. more than 30 years ago at 2A,B and C, Satya Doctor Road and constructed godowns and sheds thereon for the purpose of use in their business. The company used all the godowns for their own business for a pretty long time. But when their business came down, the assessee licensed a part of the total godown space to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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