Income-tax---

----Business---Business income---Business closed and quarters attached to factory let out---Rental income was not assessable as business income-- Indian Income Tax Act, 1961, S.28,

The assessee was the owner of oil mill premises. Though the oil mill was closed for the last 35 years, the quarters attached to the factory of the oil mill were let out to different tenants. The income derived from the let out portion of the oil premises from different tenants had been clubbed by the assessee in his business income derived from other sources. This was accepted by the Appellate Assistant Commissioner and the Tribunal. On a reference:

Held, that the Tribunal was not correct in holding that the income from the premises in question was business income and assessing the same as such.

CIT v. Ramdas & Sons (1997) 225 ITR 416 (Pat.) fol.

Bengal Jute Mills Co. Ltd. v. CIT (1949) 17 ITR 308 (Cal.); CEPT 'v. Shri Lakshmi Silk Mills Ltd. (1951) 20 ITR 451 (SC); CIT v. Central Studios (P.) Ltd. (1973) 88 ITR 298 (Mad.) and East India Housing and Land Development Trust Ltd. v. CIT (1961) 42 ITR 49 (SC) ref.

S. K. Sharan for the Commissioner.

Shambhu Sharan for the Assessee.

JUDGMENT

This is an income-tax reference under section 256(1) of the Income Tax Act, 1961. The following question is referred by the Tribunal for the opinion of this Court:

"Whether the Tribunal was correct in law in holding that the rental income of the assessee was liable to be assessed as business income?"

The assessee is a firm deriving income from contract work. The assessee is also owner of oil mill premises and though the oil mill is closed for the last 35 years, the quarters attached to the factory of the oil mill is let out to different. tenants. The income derived from the let out portion of the oil mill premises from different tenants has been clubbed by the assessee in his business income derived from other sources. The Income-tax Officer, the Appellate Commissioner and .the Tribunal held that since the business activity of the oil mill is closed since last 35 years, therefore, income derived from factory premises as rent from tenants the same is to be assessed to tax as business income.

An application was moved before the Tribunal for referring the question to this Court. The Tribunal observed that in the preceding year the same point arose and the Tribunal had referred the matter to this Court and the same has been disposed of by a Division Bench of this Court in CIT v. Ram Das & Sons (1997) 225 ITR 416. This Court dealt with the issue in detail referring to other decisions of other High Court as also of the Supreme Court.

In CIT v. Ramdas & Sons (1997) 225 ITR 416, the conclusion reached by this Court is that the Tribunal was not correct in holding the income from the premises in question to be business income and assessing the same as such. Therefore, this Court answered the question referred to this Court for opinion in the negative, i.e., in favour of the Revenue and against the assessee.

Learned counsel appearing for the assessee no doubt referred to a catena of decisions contending that the decision referred to in the case of CIT v. Ramdas & Sons (1997) 225 ITR 416 (Patna), had not taken into consideration various other aspects of the case. But what are those other aspects he could not elaborately pointed out successfully supporting the same by relevant materials and decisions. Thus, in our view it is not safe to interfere with the same in any manner and the ratio laid down in CIT v. Ramdas & Sons (1997) 225 ITR 416 (Patna).

On the other hand, we may point out that for the view taken in CIT v. Ramdas & Sons (1997) 225 ITR 416 (Patna), the Division Bench of this Court has relied upon the decisions in the case of CIT v. Central Studios (P.) Ltd. (1973) 88 ITR 298 (Mad); Bengal Jute Mills Co. Ltd. v. CIT (1949) 17 ITR 308 (Cal); CEPT v. Shri Lakshmi Silk Mills Ltd. (1951) 20 ITR 451 (SC) and East India Housing and Land Development Trust Ltd. v. CIT (1961) 42 ITR 49 (SC).

Out of these decisions, two Supreme Court decisions precisely deal with the points in issue. Thus the matter is issue in fully covered. .

Since the matter my issue has been set at rest by this Court on the basis of the decisions of the apex Court as referred to above, we hold that the matter in issue under this reference is aptly covered by the decision in CIT.v. Ramdas & Sons (1997) 225 ITR 416 (Patna), and we follow the same dictum and hold that the Tribunal, was not correct in holding that income from the premises in question to be business income and assessing the same as such. We, accordingly answer the question referred to this Court for opinion in the negative, i.e., in favour of the Revenue and against the assessee.

M:B.A./4166/FCReference answered.