Commissioner of Income Tax vs K. Vijaya Kumar

A. Subbulakshmy, J.—At the instance of the Revenue, the following question of law has been referred to us :

Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the income from the godown is assess able

under the head ''Business'' and not under the head ''Property'' ?

The assessee is a Hindu undivided family and derives income from property and business. The business income consisted of income from its

ginning and pressing"" factory. Besides the factory there was a contiguous shed type construction in which the customers of the assessee left their

cotton before and after baling. For such facility, the assessee recovered from the customers rent charges and such charges had been taken to be

income from property by the Income Tax Officer. On appeal, the Commissioner found that the godown receipts were referable to business

activities and consequently constituted the business receipts. The Tribunal upheld the order of the Commissioner. The Tribunal has held that from

the lease agreement it is seen that the godown has been earmarked only for storing, picking and clearing and mixing of cotton and cotton waste and

therefore, the purposes of the use of godown are intimately connected with the specific nature of the activities carried on by the assessee and it is

not as if the lessees could sublet or carry on any other activity in the godown let out to them. In the facts and circumstances of the case, the

Commissioner of Income Tax (Appeals) was justified in drawing the correct inference from the facts found by him and arriving at the correct

conclusion that the income from the godown is assessable as business income and not income from house property as held by the Income Tax

Officer. We find no error in the view taken by the Tribunal. We hold that the income from the godown is assessable under the head ""Business

since the godown is used in connection with the business activity of the assessee. We answer this question of law in favour of the assessee and

against the Revenue.