| Case ID |
443e72af-7b5d-408a-8d83-6937e50acf02 |
| Body |
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| Case Number |
Original Petition No. 11346 of 1995-S |
| Decision Date |
Feb 16, 1996 |
| Hearing Date |
|
| Decision |
The Tribunal correctly held that the rental income derived from leasing part of the assessee's weaving shed constituted business income. The Income Tax Officer's initial assessment of the rent received as business income was upheld despite the Commissioner's directive to classify it as income from house property. The Supreme Court decisions cited reaffirm the principle that income from a commercial asset, capable of being exploited, retains its character as business income regardless of how it is used. The income of Rs. 77,700 was received for the use of a commercial asset, which the company, engaged in manufacturing hosiery, had leased out for storage purposes. Therefore, the petition was dismissed as no question of law arose from the Tribunal's order. |
| Summary |
This case revolves around the classification of rental income from a commercial asset under the Income Tax Act, 1961. The primary issue was whether the income received from leasing part of a weaving shed by a hosiery manufacturing company should be categorized as business income or income from house property. The Kerala High Court affirmed the Tribunal's ruling that the rental income was indeed business income, as the asset was part of the company's operational infrastructure. This ruling is significant as it emphasizes the nature of income derived from commercial assets and reinforces the legal understanding that such income retains its classification as business income when the asset is capable of being exploited for commercial purposes. The decision aligns with precedents set by the Supreme Court, highlighting the need for careful consideration of how assets are utilized in determining tax classification. This case serves as a critical reference for similar disputes regarding income classification under the Income Tax Act. |
| Court |
Kerala High Court
|
| Entities Involved |
MALABAR AND POINEER HOSIERY (P.) LTD
|
| Judges |
V. V. Kamat,
G. Sivarajan
|
| Lawyers |
N.R.K. Nair for Petitioner,
P.G.K. Warriyar,
M.K. Kesavan for Respondent
|
| Petitioners |
COMMISSIONER OF INCOME TAX
|
| Respondents |
MALABAR AND POINEER HOSIERY (P.) LTD
|
| Citations |
1997 SLD 180,
1997 PTD 1512,
(1996) 221 ITR 117,
(1996) 75 TAX 234
|
| Other Citations |
C.E.P.T v. Shri Lakshmi Silk Mills Ltd. (1951) 20 ITR 451 (SC),
CIT v. Ajtnera Industries (P.) Ltd. (1976) 103 ITR 245 (Cal.),
CIT v. National Storage (Pvt.) Ltd. (1967) 66 ITR 596 (SC),
East India Housing and Land Development Trust Ltd. v. CIT (1961) 42 ITR 49 (SC),
Karanpura Development Co. Ltd. v CIT (1962) 44 ITR 362 (SC)
|
| Laws Involved |
Income Tax Act, 1961
|
| Sections |
22,
28,
256
|