| Case ID |
4257a320-1404-4daf-a208-2e81d2406729 |
| Body |
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| Case Number |
IT CASE No. 31 OF 1982 |
| Decision Date |
Jan 14, 1986 |
| Hearing Date |
|
| Decision |
The court held that the rental income derived from letting out the godowns could not be considered as income from business, as the business activity of the petitioner had completely ceased after 1974. The Supreme Court's principle in CEPT v. Shri Lakshmi Silk Mills Ltd. was applied, emphasizing that if a commercial asset is not capable of being used as such, the income generated from its letting out does not qualify as business income. Therefore, the income was treated as income from house property, and no referable question of law arose from the Tribunal's order. |
| Summary |
In the case of Hindu Cotton Press Co. Ltd. vs. Commissioner of Income Tax, the Punjab and Haryana High Court addressed the issue of whether rental income from godowns could be classified as income from business or house property. The petitioner company had ceased its business activities after selling its machinery in 1974 and subsequently let out its godowns. The Income Tax Officer categorized the rental income as income from house property, which was upheld by the Tribunal. The court reaffirmed the legal principle that the nature of income depends on the operational status of the business. Since the business had completely shut down, the rental income was deemed separate from business operations. This ruling highlights the complexities of tax classification in the context of ceased business activities, aligning with recent trends in tax law and commercial asset utilization. The decision underscores the importance of understanding the implications of business cessation on income classification, making it relevant for taxpayers and legal practitioners alike. |
| Court |
Punjab and Haryana High Court
|
| Entities Involved |
Commissioner of Income Tax,
Hindu Cotton Press Co. Ltd.
|
| Judges |
S.P. Goyal,
Pritpal Singh
|
| Lawyers |
Balwant Singh Gupta,
Ashok Bhan,
Ajay Mittal
|
| Petitioners |
Hindu Cotton Press Co. Ltd.
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1986 SLD 2510,
(1986) 160 ITR 440
|
| Other Citations |
CEPT v. Shri Lakshmi Silk Mills Ltd. [1951] 20 ITR 451 (SC)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
256,
22
|