Case Law Details

Case Name : ACIT Vs Popat Jamal & Sons (ITAT Chennai)
Appeal Number : Appeal No.: ITA No. 543/Mds/05 & 1344 to 1348/Mds./06
Date of Judgement/Order : 25/04/2008
Related Assessment Year :
Courts : All ITAT (7164) ITAT Chennai (293)


4.2 In the case of CIT vs. National Storage Pvt. Ltd. reported in 66 ITR 596, the Hon’ble Apex Court has held:

“In our view, the High Court was right in holding that the assessee was carrying on an adventure or concern in the nature of trade. The assessee not only constructed vaults of special design and special doors and electric fitting, but it also rendered other services to the vault-holders. It installed fire alarm and was incurring expenditure for the maintenance of fire alarm by paying charges to the municipality. Two railway booking offices were opened in the premises for the dispatch and receipt of film parcels. This, it appears to us, is a valuable service. It also maintained a regular staff consisting of a secretary, a peon, ka watchman and a sweeper, and apart from that it paid for the entire staff of the Indian Motion Picture Distributors’ Association an amount of Rs.800 per month for services rendered to the licensees. These vaults could only be used for the specific purpose of storing of films and other activities connected with the examination, repairs, cleaning, waxing and rewinding of the films.

But the learned counsel for the Commissioner says that section 9 applies because the assessee cannot be said to be in occupation of the premises for the purpose of any concern of its own. He says that the licensees were in possession of the vaults as lessees and not merely as licensees. But, in our opinion, the agreements are licenses and not leases. The assessee kept the key of the entrance which permitted access to the vaults in its own exclusive possession. The assessee was thus in occupational of all the premises for the purpose of its own concern, the concern being the hiring out of specially built vaults and providing special services to the licensees. As observed by Viscount Finlay in Governors of the Rotunda Hospital, Dublin v. Coman ‘the subject which is hired out is a complex one’ and the return received by the assessee is not the income derived from the exercise of property rights only but is derived from carrying on an adventure or concern in the nature of trade.”

In our view the Commissioner (A) has rightly relied on the above mentioned judgement of the Apex Court while deciding the appeal. Suite the assessee is providing a host of facility for storage, loading and unloading- safety and security of the goods and hiring for providing these facilities. Therefore in our view the income derived from providing facility of storage in the warehouses is income from business of the assessee and cannot be treated as income from house property. The basic condition for income derived from house property is to let out the property against rent. Thereby the lessee is free to use the property for his best enjoyment and use. The basic ingredient of letting out of property is transfer of possession/occupation which is absent in the case in hand. In the present case, the use of warehouses of the assessee by other parties for storage of their goods cannot be even termed as licensee. The goods are being entrusted to the assessee for storage and keeping safe and under security. Therefore we find no merits in the appeals of the Revenue and accordingly the appeals of the Revenue are dismissed and the orders of the Commissioner (A) are upheld.


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