Brief of the case
In the present case the Hon’ble High Court held that Business is a continuous activity which is done year to year. Here, in this case the Assessee let out his godown and shown income as “Income from Business” instead of “Income from property” to which the Hon’ble High court do not agree and held that the income from the letting out godown will be “Income from Property” as it was not the continuous activity from year to year.
Facts of the Case
The assessee is a partnership Firm engaged in export of Tobacco. During the A.Y. 1992-93, the assessee had let out his godowns. He offered the rental income for taxation under the head income from business. It was being used by him for the business of export of tobacco, and whenever they were not in use, he had given them on lease to third parties and received rent from them. He, therefore, claimed on the basis of partnership deed, that the godowns of the firm were let out, as provided for in the said deed being a part of their business, the rent received from the lessee should be treated as income from business. For the earlier years i.e. 1990-91, 1991-92 it was assessed as income from property on the ground that no business as such was carried on by the assessee during those years.
Held by CIT(A)
The CIT(A), held that the income from letting out of the godowns should be treated as income from business.
Held by the Hon’ble Tribunal
The Hon’ble Tribunal confirmed the order of the CIT(A) and held that so long the character of the godown is retained as a godown, it should be treated as a commercial asset and its rental income must be treated as an exploitation of commercial asset in the nature of trade.
Discussion
The Hon’ble High Court before giving the Judgment discussed various case laws submitted by the parties. The Judgments are discussed as under:
Comments are closed.