Opinion Of Eminent Legal Luminaries On Controversial Issues

Business income or Income from house property or Income from other sources-Single Transaction in the course of business

QUERY: The main object of the company is leasing of the premises. However, the company is having only one property as investment which is shown in the books of account. The said property is leased to a third party, whether the income of leasing of premises can be assessed as income from house property or business income. If the consolidated agreement is entered into for leasing of property and furniture can the AO bifurcate the expenses as a income from other sources and property income.
ANSWER: The main object of the company is leasing of the premises. The company is having only one property shown as investment in the books of account and the said property is given on lease to third party as per the object of the company. Therefore, income from leasing is to be shown under the head “Profits and gains of business or profession”.
Lord Clyde L P. observed in Balgownie Land Trust Ltd. v. I.T. [14 TC 684} “A single plunge may be enough, provided it is shown to the satisfaction of the Court that the plunge is made in the waters of trade, —–“ quoted with approval in G. Venkataswamy Naidu & Co. v. CIT [35 ITR 594 (SC)]
If it is proved with other surrounding circumstances that leasing of premises is a business, then, the Assessing Officer has no right to bifurcate income, if it is through consolidated agreement with furniture.
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