1. This reference under Section 256(1) of the Income-tax Act, 1961 ('the Act' for short), on an application filed by the Revenue, to the Income-tax Appellate Tribunal, Patna Bench, Patna, has been made to this court for its opinion on the following question of law, which appertains to the assessment year 1979-80 :
'Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that the income derived by the assessee by letting out of the godowns to the Food Corporation of India on rent, was assessable under the head 'Business' and not under the head 'Income from house property' ?'
2. The facts can be taken from the statement of the case, which has been drawn up by the Appellate Tribunal and are as follows :
3. The assessee is a company. It took on lease a plot of land for a period of 25 years on payment of lease rent on monthly basis. On June 2, 1976, the assessee entered into an agreement with the Food Corporation of India (FCI) for construction of godowns and for letting out the said godowns to the Food Corporation of India on monthly rental basis. In its return for the assessment year 1979-80, the assessee claimed that the rental income derived by it from the Food Corporation of India was its business income. The Income-tax Officer, however, negatived the assessee's claim and held that the rental income received by the assessee from the Food Corporation of India was assessable under the head 'Income from house property'. Subsequently, on the Inspecting Assistant Commissioner (Assessment)'s direction under Section 144B, the Income-tax Officer assessed the rental income in the hands of the assessee-company under the head 'Income from other sources'.
4. The Commissioner of Income-tax (Appeals) agreed with the draft assessment proposal of the Income-tax Officer and held that the income derived by the assessee from the Food Corporation of India was assessable under the head 'Income from house property', on the ground that the assessee took land on lease initially for a year and from November 8, 1978, i.e., on the date the deed of registration was executed, the assessee became the owner of the land along with the structure raised thereon.
5. The Revenue then filed an appeal before the Appellate Tribunal against the order of the Commissioner of Income-tax (Appeals). The Appellate Tribunal held that the amount received from the Food Corporation of India was assessable under the head 'Business'. The Appellate Tribunal on scrutiny of the agreement dated June 2, 1976, entered into by the assessee with the Food Corporation of India found that the assessee was not the owner of the land but was a lessee thereof for a period of 25 years. The Tribunal also found that the assessee constructed the structure on the land according to the specifications of the Food Corporation of India and that the assessee was obliged under the terms of the tenancy agreement to keep the godown as well as the approach thereto in such a way as to fulfil all the purposes for which it was let out. On these facts, the Appellate Tribunal held that the assessee's case came squarely within the ratio laid down by the Supreme Court in the cases of Kamani Properties Ltd. v. CIT : [1971]82ITR547(SC) and S. G. Mercantile Corporation P. Ltd. v. CIT : [1972]83ITR700(SC) .
6. Mr. Sharan, learned counsel for the Revenue, referred to the decision of the Supreme Court in East India Housing and Land Development Trust Ltd. v. CIT : [1961]42ITR49(SC) and submitted that the income derived by the assessee on the facts and circumstances in the present case before us would be income from property and not from business.
7. In Sultan Brothers Private Ltd. v. CIT : [1964]51ITR353(SC) the Supreme Court held that whether a 'particular letting' is business or not is to be decided in the circumstances of each case. Each case has to be looked at from a businessman's point of view to find out whether the letting was the doing of a business or the exploitation of his property by an owner.
8. In the present case what we find is that the superstructure on the land, which was held on lease by the assessee, was owned by him. It is correct that the godown was constructed as per the specification of the Food Corporation of India but there is no finding of the Appellate Tribunal as to what were the objects of the assessee, which is a limited company under the Companies Act, and whether in fact it was in the business of developing the landed properties and promoted markets, as held by the Supreme Court in East India Housing and Land Development-Trust Ltd. v. CIT : [1961]42ITR49(SC) . Even that could not be enough to hold that the income derived would be income to be assessed against the head 'Business'. Considering the statement of facts as found by the Tribunal we are of the opinion that the income in the present case would be 'income from property' and 'not from business'.
9. Accordingly, we answer the question in the negative, in favour of the Revenue and against the assessee.
10. Since the assessee is not represented, there will be no order as to costs.