Karnataka Court March 1986 Judgments

D.R. Puttanna Sons Pvt. Ltd. Vs. Commissioner of Income-tax

Court: Karnataka

Reported in: (1987)59CTR(Kar)108; [1986]162ITR468(KAR); [1986]162ITR468(Karn)

K. Jagannatha Shetty, Actg. C.J.1. By this reference under section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following question : 'Whether the Tribunal was right in law in holding that the income derived by the company was assessable under the head 'Property' ?' 2. The facts are simple and lie in a narrow compass. The assessee is a private limited company. The company has taken on lease a site on December 6, 1973, on payment of stipulated rent for a period of 30 years. The lease, inter alia, stipulated that the assessee had to put up a building within certain time and upon expiry of the period of 30 years, the entire property with the building constructed thereon should revert to the lessor. Accordingly, the assessee constructed a building and let it out on rent. The income derived by way of rent was shown in the return as income from business. The Income-tax Officer, however, held that since the assessee had taken on lease the site in question and constructed t...