# Akhilesh Kumar Chaubey v. State of U.P. and others

- **Citation:** (2005) 2 ILRA 840
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2005-07-08
- **Case number:** Income Tax Reference No. 127 of 1993
- **Bench:** R.K. Agrawal, Rajes Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/akhilesh-kumar-chaubey-v-state-of-u-p-and-others-40552
- **Pages:** 10

## Headnote

Income Tax Act 1961-Section 256 (2)-
Income from leasing of Balrampur lodge
to S.B.I.-receipts from workshop, Cold
Storage Motor garage, Raj Oil Pump of
Development Division whether should be
taxed under head of business income or
the income from other sources?-heldshould
be
taxed
as
income
from
2 All] Akhilesh Kumar Chaubey V. State of U.P. and others 841
business-accordingly the question No.
1,2 and 3 answered affirmative.

Held: Para 14

So far as question no. 3 is concerned,
Tribunal has given reasoning for coming
to the conclusion that the rent from cold
storage, motor garage, Raj Oil Mill and
approval charges may be taxed under
head income from business and not
under head income from other sources.
We do not find any error in the view of
the Tribunal.
Case law discussed:
51 ITR 353
20 ITR 451
147 ITR 692
83 ITR 700
249 ITR 47
263 ITR 143
247 ITR 516

## Text

INDIAN LAW REPORTS ALLAHABAD SERIES [2005
840
indicative of the fact that the requirement
was of a perpetual and regular nature. It is
not the case of the respondents that the
work of tube well operators no more
exists. It has also not been pleaded that
such tube well operators are no more
required. On a vacancy which may occur
of a part time tube well operator the tube
well still has to be operated, therefore, the
nature of work is existing day to day and
the respondents have taken the services of
the petitioner's father due to existence of
work since 1987 continuously. During
this period of nearly 12 years the salary
has been disbursed by the respondents
month to month. The nature of work
required
to
be
performed
by
the
petitioner's father was of a regular nature
as is apparent from a reading of the
appointment letter dated 20.5.92 wherein
the duties of the petitioner have been
prescribed. It is also not disputed by the
learned Standing Counsel that the part
time tube well operators are being paid
the same salary as regularly appointed
tube well operators on the principle of
'equal pay for equal work.' The duties,
qualifications and hours of working of
part time tube well operators and regular
tube well operators are identical has been
held by this court and the Hon'ble
Supreme Court in SLP © No.16219 of
1994 decided on 22.3.1995.

14. For the aforesaid reasons and the
facts of this case it is concluded that the
Government Order dated 26.10.1998
would not be applicable in the present
case in as much as the petitioner's father
would come under the definition of
'Government Servant' as defined under
Rule 2(a) (iii) of the Rules for the purpose
of appointment of his dependants on
compassionate grounds.

15. Consequently the writ petition
deserves to be allowed. The impugned
orders dated 25.1.2000 and 29.1.2000
passed by the respondent no.2 and no.3
respectively are quashed. The matter is
remitted back to the respondent no.2 to reconsider the petitioner's application dated
29.12.99 under the Dying in Harness
Rules 1974. The respondent no.2 will take
a decision on the same after giving full
opportunity to the petitioner within three
months from the date of a certified copy
of this order is produced before him.

16. The writ petition is allowed. No
order is passed as to costs.
Petition Allowed.
---------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 08.07.2005

BEFORE
THE HON'BLE R.K. AGRAWAL, J.
THE HON'BLE RAJES KUMAR, J.

Income Tax Reference No. 127 of 1993

The
Commissioner
of
Income
Tax
(Central), Kanpur

...Applicant
Versus
M/s Pateshwari Electrical & Associated
Industries (Pvt.) Ltd., Gonda ...Respondent

Counsel for the Applicant:
Sri Shambhe Chopra
S.C.

Counsel for the Respondent:

Income Tax Act 1961-Section 256 (2)-
Income from leasing of Balrampur lodge
to S.B.I.-receipts from workshop, Cold
Storage Motor garage, Raj Oil Pump of
Development Division whether should be
taxed under head of business income or
the income from other sources?-heldshould
be
taxed
as
income
from
2 All] Akhilesh Kumar Chaubey V. State of U.P. and others 841
business-accordingly the question No.
1,2 and 3 answered affirmative.

Held: Para 14

So far as question no. 3 is concerned,
Tribunal has given reasoning for coming
to the conclusion that the rent from cold
storage, motor garage, Raj Oil Mill and
approval charges may be taxed under
head income from business and not
under head income from other sources.
We do not find any error in the view of
the Tribunal.
Case law discussed:
51 ITR 353
20 ITR 451
147 ITR 692
83 ITR 700
249 ITR 47
263 ITR 143
247 ITR 516

(Delivered by Hon'ble R.K. Agrawal, J.)

1. At the instance of Commissioner
of Income Tax, Tribunal has referred
three questions, 1, 2, 3 and at the instance
of assessee Tribunal has referred the
following question, which is marked as
question no. 4 under Section 256 (2) of
the Income Tax Act, 1961, (hereinafter
referred to as "the Act") for opinion of
this Court relating to the assessment years
1987-88 and 88-89:

"1. Whether on the facts and in the
circumstances of the case, the Hon'ble
Tribunal was correct in holding that
income from leasing of Balrampur
Lodge to S.B.I., was assessable as
business income and not as income from
house property?

2.
Whether on the facts and in the
circumstances of the case, the Hon'ble
I.T.A.T., was correct in holding that
expenses incurred on Nainital Property
be allowed as business expenses ignoring
the fact that these expenses were not at
all related to business activity?
3.
Whether on the facts and in the
circumstances of the case, the Hon'ble
Tribunal was correct in holding that
treatment of receipts from workshop,
cold storage, motor garage, Raj Oil
Pump and supervision charges, of
Development Division should be taxed
under the head Income from business
and not under the head income from
other sources?
4.
Whether the Tribunal was justified
in law in holding that the Bank interest
on Fixed Deposits representing the
particular amount received from U.P.
State Electricity Board against a Bank
Guarantee furnished by the assessee was
taxable for the Assessment Years 198788 & 1988-89 on the particular facts and
circumstances of the case?"

The brief facts of the case are
follows:

2. The assessee company has
income from letting out of house property
at Nainital and in addition has lease rent
from letting out of workshop, cold
storage, motor garage, Raj Oil and interest
income
plus
Miscellaneous
Income.
During the year under consideration the
assessee's claimed income from letting
out of Nainital Lodge to S.B.I. on
monthly rent of Rs.22,500/- Rs.2,77,410/-
as business income was rejected and
assessed
as
income
from
property.
Expenses on the property claimed as
business expenses were also disallowed.
Similarly, receipts from workshop, cold
storage, motor garage, Raj Oil Pump,
supervision
charges
of
Development
Division,
amounting
to
Rs.10,416;
Rs.45,000/-; Rs.11,321/-; Rs.9,000/- and
INDIAN LAW REPORTS ALLAHABAD SERIES [2005
842
Rs.20,300/- for the A.Y. 1987-88 as well
as Rs.6,250/-; Rs.72,000/-; Rs.18,781/-
and Rs.12,000/- respectively for the A.Y.
1988-89 respectively were assessed as
income from other sources. Aggrieved
with the decision of the Assessing
Officer, the assessee preferred appeal
before the Ld. C.I.T. (Appeals), who vide
his consolidated order dated 21.09.1992
has decided the issues against the
assessee. Being dissatisfied with the
decision of Ld. C.I.T. (A) the matter was
taken up by assessee before I.T.A.T., who
vide
its
consolidated
order
dated
21.09.1992 has decided the issue in
favour of assessee.

3. The contention of the assessee
before the Tribunal, which his referred in
the order of the Tribunal were as follows:

"(i) The entire property is divided
into two parts by a nalla, the main part
comprising of the main building and the
extensive grounds apourtenant thereto
and the other part on the other side of
the nalla comprising of outhouses and
servant quarters.

(ii) Upto assessment year 1984-85
the main building was in the possession
of the assessee and used as a guest house
and was assessed to tax as a business
assets.

(iii) The guest house and servant
quarters were unauthorisedly occupied
by Govt. servants, etc. the income from
which was offered to tax under property.
However, for the year under appeal,
there is no property income, the assessee
has filed eviction proceedings against the
unauthorized occupants of the servant's
quarters.

(iv) The assessee in conjunction
with PICCUP had got the main building
and the property surveyed by an expert
and a report from him was received for
the conversion of the property into a
Hotel.

(v) During
the
process
of
conversion a proposal was received from
S.B.I. for the main building and
furniture with 30 beds accommodation
for trainees alongwith other facilities for
conducting a training centre.

(vi) As the activity was akin to hotel
business,
the
offer
was
accepted
especially in view of the fact that the
offer was for use of the premises
throughout the year in contract to the
seasonal character of the tourist trade in
Nainital.

(viii) A Sarai Licence was obtained
from the D.M. for carrying on the above
activity as Balrampur Lodge and also a
licence from the District Health Officer.
Such licences have been issued from
year to year upto date.

(ix) The Municipality gave a notice
for revision in the Municipal Taxes after
the SBI started the Training Centre. The
assessee represented their case for being
assessed as a business activity as in the
case
of
any
hotel.
The
Nainital
Municipality accepted the contention.

(x) Nearly
1/3rd
of
the
main
building is still in use of the assessee
housing a Branch Office and the office
of the Deputy Agent and quarters for the
visiting Directors, Secretary and other
staff
of
the
Company,
Gardeners,
sweepers etc. have also been engaged for
maintenance and upkeep of the property,
the lawns and the garden which are in
the exclusive possession of the assessee.

(xi) The assessee also relies on the
fact that the lease with SBI was for a
period of 5 years with an option for lease
is for a temporary period and the
assessee has already indicated to S.B.I.
2 All] The Commissioner of Income Tax V. M/s Pateshwari Electrical & Associated 843
that after the ten year period they want
proper tourist facility.

(xii) It is the assessee's case that in
view of the huge and continuous losses
suffered by it over the past several years,
the leasing of the property for a period of
10 years could be considered as a
business activity as per decided case law.

(xiii)
The assessee has also
referred to the fact that it has set up
another hotel at its headquarter in
Balrampur from October, 1987, the
income from which has been assessed to
tax by the A.C. in the immediately
succeeding assessment year 1989-90
under
the
head
'Business'.
This
according to the assessee is a pointer to
the assessee's objective of conducting
hotel and restaurant business.

(xiv) The Tribunal in its earlier
order has missed on most of the points. It
is argued that the authority under the
Sarai Act is the D.M. and the Tribunal is
obliged to accept the D.M.;s authority
rather their find fault with the D.M.'s
action. Besides, if the D.M. should order
the closure of the establishment under
the Sarai Act, the assessee is bound to
close down the establishment of the
Training Centre.

(xv) It is further pointed out that the
assessment by the Nainital Municipality
of the property as a business asset and
that
the
assessee
had
suffered
continuous and huge losses in the past
and the lease to SBI was for a short
duration were not kept in view in the
earlier years.

(xvi) The recent Inspection report
amply supports the above submissions.

(xvii)
In any case, the lease to
S.B.I. is not a lease of property
simpliceter and its assessment under the
head property for the earlier year
appears to have been in error."

4.
Apart from the
aforesaid
submissions, perusal of the assessment
order for the assessment year 1987-88
shows
that
the
assessee
had
also
submitted that the assessee had to
maintain a guest register, showing all
details of guest like their names, address,
date of arrival, period of stay, number of
occupants, coming from, destination,
room number etc.

Tribunal on the aforesaid fact held as
follows:

"After hearing the rival submissions
and after going through the material
placed before us and also after on-thespot inspection, we are of the view that it
is a case of exploitation of an asset by a
businessman for getting the maximum
return on a commercial asset, although
temporarily let out to State Bank of India
with certain modification. At the time of
inspection of the property, we noticed
that there was a nalla passing through
the land, which separates the main
building from the quarters. Some rooms
were still being used for housing the
Administrative Office faculty Members'
Office while others were used as hotel
accommodation for the visiting trainees.
It was also noticed that structural
changes had been made in the building
to suit the requirements of the visiting
trainees. The licence granted by the
District authorities under the Sarai Act
was found displayed in the front portion
of the building. The back portion of the
building was housing the office of the
company
and
the
Resident
Representative of the assessee-company
was having his office. One room was
being used as the office of the visiting
Officers of the Company, two rooms
were used for the stay of the Officers of
the
company
visiting
Nainital
on
INDIAN LAW REPORTS ALLAHABAD SERIES [2005
844
company's work. The lawns were found
to be in the possession of the company
and
they
are
maintained
by
the
employees of the company. The State
Bank of India was not allowed to use the
lawns.
From
the
copy
of
the
correspondence produced in the court,
we notice that the Chief General
Manager, State Bank of India, Moti
Mahal Marg, Lucknow has already been
informed to quit and vacate the premises
by the end of the year, i.e. by 31.12.1992.
Upto assessment year 1984-85 this
Nainital Lodge property was used and
accepted by the department as a business
asset. The Expert Project report was
commissioned with a view to convert the
property into hotel. During the process
of conversion of the property into a lodge
house, an offer was received from S.B.I.
to provide this place with furniture and
fittings for the use of their training
center with accommodation of 30 beds,
for the visiting trainees. The hotel
business in Nainital was seasonal and
the offer of the S.B.I. was accepted. A
Sarai licence was obtained from the
District Magistrate, Nainital for carrying
on the said business as also a licence
from the District Health Officer and this
licence has been renewed from year to
year. Nearly 1/3rd of the accommodation
was in the use of the assessee housing a
Branch Office of the company. The
Municipality of Nainital has assessed the
property as a hotel establishment. This is
clear from pages 121 to 124 of the Paper
Book II. The servant's quarters on the
other side of the nalla had been offered
to tax under the head property, but those
occupants were given notices to vacate
and the assessee was not receiving
anything from the under the head
property income. The continuous losses
incurred by the company in the past
years seriously eroded the paid up capital
of the company and in an effort to partly
recour these losses with a short term
lease agreement was entered into with
S.B.I. The entire building came in the
use of the S.B.I. from May, 1984 only
indicating the temporary natura of the
arrangement. In view of these facts, we
are of the view that leasing out the
National lodge to S.B.I. was nothing
except exploitation of a business asset
and the same was assessable as income
from business. The assessee's contention
in this regard are accepted by us for both
the years under consideration, and the
contention relied to the contrary on
behalf of the department are found not
tenable. This point is decided in favour
of the assessee."

With regard to the question no. 3
Tribunal has recorded the following
findings:

"The next controversy relates to the
treatment of receipts from workshop,
Cold Storage, Motor Garage, Raj Oil
Pump
and
supervision
charges
of
Development Division. It was argued
before the first Appellate Authority that
the income from commercial asset was
treated as business income for earlier
years, that the case laws cited by the
Assessing Officer were not new and
despite those case laws income from
commercial asset was used as business
income and was taxed as such in earlier
years, that the leasing was not of house
property
but
a
complex
operation
involving machinery and plant etc. that
no new facts were brought to the notice
of the Assessing Officer and that his
decision to assessee the income under
the head "Other Sources" represented
only a change of income, that the letting
2 All] The Commissioner of Income Tax V. M/s Pateshwari Electrical & Associated 845
out was a temporary phase and not a
permanent
arrangement,
that
the
assessee possessed the cold storage, that
the 'Supervision charges' received for
supervision of Construction of Digvijaya
Complex could not be assessed as
income from "Other Sources". The
C.I.T. (A) rejected the submission of the
assessee and held that the income was a
assessable
under
the
head
"Other
Sources". We notice that the finding
recorded by the learned first Appellate
Authority in paragraph 14 of his order
for these two years is not based on
evidence when he says that the assessee's
task was confined only to taking of lease
rent without any intention to resume the
business and that it could not be equated
with the period of full or temporary
exploitation of assets. From the whole lot
of correspondence produced before us, it
could not be said that it was a permanent
arrangement in the case of the appellantcompany. The inference of the Ld. C.I.T.
(A) that it premises having been leased
was almost appreciation of the facts and
material on record. It is noted that the
cold storage was re-possessed by the
assessee. Therefore, the inference that it
was a permanent arrangement stands
automatically rebutted. Therefore, we
are of the view that the treatment of
receipts from workshop, cold storage etc.
should be taxed under the head income
from business and not under the head
income from 'Other Sources'. This point
is decided in favour of the assessee and
contentions to the contrary raised by the
learned Department Representative are
found not tenable."

5. With regard to the question no. ---
- referred at the instance of the assessee
brief facts of the case as follows:

The assessee undertaking for the
manufacture and distribution of electricity
was acquired by UPSEB on 13.05.1964.
A dispute arisen about the quantum of
compensation payable by UPSEB to the
assessee. The matter was referred to the
Arbitrators who in addition to the
compensation already paid, granted under
their award dated 24.12.1973; further a
sum of Rs.43,82,000/- with interest @ 6%
from the date of the award until the date
of
payment
of
the
additional
compensation
awarded.
The
UPSEB
disputed the award before the District
Judge and the High Court, who confirmed
the award. Under the High Court's
judgment the assessee was entitled to a
sum
of Rs.67,68,514/-
inclusive
of
interest @ 6%. The UPSEB approached
the Supreme Court under Special Leave
of Appeal disputing, inter-alia, the award
of 6% interest by the Arbitrators. The
assessee approached the Supreme Court
for interim relief and the Supreme Court
by its order dated 04.05.1982 awarded
50% of the claim against provision of
bank guarantee. The payment received
from UPSEB was lodged in Fixed Deposit
@ 10% interest against which the bank
issued bank guarantee as required by
Supreme Court. Assessee transferred the
interest @ 6% interest earned from the
fixed deposit to the suspense account in
which a sum of Rs.33,84,257/- stood
credited to the account of UPSEB until
the final outcome of the decision before
the Supreme Court. Supreme Court
dismissed the appeal on 01.02.1991. In
these facts, Tribunal held that the in view
of the dismissal of the appeal filed by
UPSEB, all doubt about the uncertainty of
the accrual of interest of compensation
has come to an end and it can not be
argued by the assessee now that the
compensation claim of the assessee is in
INDIAN LAW REPORTS ALLAHABAD SERIES [2005
846
jeopardy. The argument raised on behalf
of the assessee that the interest earned on
the part of such compensation is in
jeopardy and can not be rightly treated as
income, has no legs to stand. Tribunal
accordingly, held that the interest accrued
on the fixed deposit was the income of the
assessee.

6. Heard Sri Shambhu Chopra,
learned Standing Counsel appearing on
behalf or the Revenue. No one has
appeared on behalf of the assessee.

7. We have perused the order of the
Tribunal and the authorities below. We do
not find any error in the order of the
Tribunal. Before coming to the facts of
the case, it would be appropriate to
examine the various cases on the subject.

8. In the case of Sultan Brothers
Pvt. Ltd. Vs. CIT, reported in 51 ITR,
353. The Apex Court while considering
whether income from letting out a
building is a business income or a
property income. Apex Court observed as
follows:

"whether a particular letting is
business has to be decided in the
circumstances of each case. Each case has
to be looked at from a business point of
view to find out whether the letting was
the doing of a business or exploitation of
his property by an owner."

9. In the case of Commissioner of
Excess Profits Tax, Bombay City Vs.
Shri Lakshmi Silk Mills Limited,
reported in 20 ITR 451, the assessee
company was manufacturer of silk cloth
and as a part of its business it installed a
plant for dying silk yarn. Due to the war
the said plant was unused and was lying
idle for sometime and therefore, was let
out to a person on a monthly rent. The
question for consideration was whether
the rent received was chargeable to tax as
profit of business or income from other
sources. Apex Court held that it was
chargeable to tax as income from
business. While dealing with the aforesaid
question.
Apex
Court
observed
as
follows:

"We respectfully concur in the
opinion if the learned Chief Justice that
if the commercial asset is not capable of
being used as such, then its being let out
to others does not result in an income
which is the income of the business, but
we cannot accept the view that an asset
which was acquired and used for the
purpose of the business ceased to be a
commercial asset of that business as
soon as it was temporarily put out of use
of let out to another person for use in his
business or trade. The yield of income by
a commercial asset is the profit of the
business irrespective of the manner in
which that asset is exploited by the
owner of the business. He is entitled to
exploit it to his best advantage and he
may do no either by using it himself
personally or by letting it out to
somebody else. Suppose, for instance, in
a manufacturing concern the use of its
plant and machinery can advantageously
be made owing to paucity of raw
materials only for six hours in a working
day, and in order to get the best yield out
of it, another person who has got the
requisite raw materials is allowed to use
it as a licencee on payment of certain
consideration for three hours; can it be
said in such a situation with any
justification that the mount realized from
the licensee is not a part of the business
income of the licensor. In this case the
2 All] The Commissioner of Income Tax V. M/s Pateshwari Electrical & Associated 847
company was incorporated purely as a
manufacturing concern with the object
of making profit. It installed plant and
machinery for the purpose of its
business, and it was open to it if any time
it found that any part of its plant "for the
time being" could not be advantageously
employed for 4 earning profit by the
company itself, to earn profit by leasing
it to somebody else.

We are therefore of the opinion that
it was a part of the normal activities of
the assessee's business to earn money by
making use of its machinery by either
employing it in its own manufacturing
concern or temporarily letting it to other
for making profit for that business when
for the time being it could not itself run
it. The High Court therefore was in error
in holding that the dyeing plant had
ceased to be a commercial asset of the
assessee and the income earned by it and
received from the lessee Messrs. Parakh
& Co. was not chargeable to excess
profits tax."

10. In the case of CIT Vs.
Shanmygham, reported in 147 ITR 692.
Assessee
constructed
a
building
consisting of 68 rooms and provided
various amenities therein for the purpose
of letting them out individually. The
assessee's claim that the rent received
from the tenants by letting out the rooms
should be assessed as business income
was rejected by the ITO, who held that
the same should be assessed as property
income. Tribunal however, accepted the
claim of the assessee. In reference, High
Court has upheld the view of the Tribunal.
High Court has held that it is not possible
to have any axiomatic principle to find
out whether in running a particular
lodging house, the assessee had been
carrying on a business or merely letting
out the property and the question has to be
decided on the basis of the facts of each
case. In the instant case, the various
features satisfied the requirements of the
lodging house being run on a commercial
basis rather than as the owner of a
property. The Tribunal was therefore,
right in its view that the income derived
by the assessee by letting out the lodging
house should be assessed as business
income.

11. In the case of S.G. Mercantile
Corporation P. Ltd. Vs. CIT, reported
in 83 ITR, 700. Company was
incorporated with the object specified in
its memorandum of association to take on
lease or otherwise acquire and to hold,
improve, lease or otherwise dispose of
land, houses and other real and personal
property and to deal with the same
commercially. Company took on lease a
market place for initial term of 50 years
spent Rs.5 lacs for the purpose of
remodeling and repairing and sublet to the
various persons. Question was whether
the income arising from subletting was
the business income. Apex Court held as
follows:

i)
that
since
the
appellantcompany was not the owner of the
property or any part thereof, no question
of making the assessment under section
9 arose;

ii) that
the
definition
of
"business" in section 2 (4) was of wide
amplitude and it could embrace within
itself dealing in real property as also the
activity of taking a property on lease,
setting up a market thereon and letting
out shops and stalls in the market;

iii) that, on the facts, the taking of
the property on lease and subletting
INDIAN LAW REPORTS ALLAHABAD SERIES [2005
848
portions thereof was part of the business
and trading activity of the appellant and
the income of the appellant fell under
section 10 of the Act."

11. In the present case Tribunal
found that property in dispute was being
used as a guest house upto the assessment
year 1984-85 and this Nainital lodge was
used and accepted by the department as a
business property. The Expert Project
report was commissioned with a view to
convert the property into hotel. During the
process of conversion of the property into
a lodging house, an offer was received
from SBI to provide this place with
furniture and fitting for the use of their
training center with accommodation of 30
beds for the visiting trainees. The hotel
business in Nainital was seasonal and the
offer of the SBI as accepted. A sarai
licence was obtained from the District
Magistrate, Nainital for carrying on the
said business and had also licence from
the District Health Officer and this licence
has been renewed from year to year. The
municipality of Nainital has assessed the
property as a hotel establishment. It was
also observed that continuous losses
incurred by the company in the past years
seriously croded the paid up capital of the
company and in an effort to partly recoup
these losses with a short term lease
agreement was entered into with S.B.I.
On these facts Tribunal held that leasing
out the Nainital lodge to SBI was nothing
except exploitation of a business asset and
was assessable as income from business.
It was also contended by the assessee
before the assessing authority that they
have also maintained a guest registration
register in which details of the guest
namely their names, address, date of
arrival, number of occupant etc. have
been maintained. This shows that as part
of running of the lodge, the entire room of
the lodge had been let out for the short
period to SBI. Now it is seen that now a
days it is common feature that the big
hotels used to let out rooms to the various
companies for year or more than year.
Therefore, it appears that intent of the
assessee was to run the lodge and letting
out of the all rooms to SBI for a particular
period was incidental and in as much as
letting out of the all rooms to SBI for a
particular period was incidental and in as
much as letting out of the rooms to SBI
for their trainees was a part of running of
the lodge business. Therefore, Tribunal
has rightly held that the receipt from SBI
was liable to business income and the
necessary
expenditure
incurred
as
business expenditure was liable to be
allowed.

Decision cited by learned Standing
Counsel are distinguishable on the facts of
the case.

12. In the case of CIT Vs.
Shambhu
Investment
Pvt.
Ltd.
Reported in 249 ITR 47, which has also
been approved by the Apex Court in the
case of Shambhu Investment Pvt. Ltd.
Vs. CIT, reported in 263 ITR 143. A
portion of the property was used by the
assessee itself or its own business
purpose, the rest of the property had been
let out to various occupants with furniture
and fixtures and air conditioners for being
used as table space. The assessee
provided services like watch and ward
staff, electricity and water and other
common amenities. Service rendered to
the various occupants according to such
agreement was not separately charged and
the monthly rent payable was inclusive of
all charges to the assessee. Calcutta High
Court held that agreement shows that
2 All] The Commissioner of Income Tax V. M/s Pateshwari Electrical & Associated 849
assessee had let out office to the
occupants on monthly rent which was
inclusive of all charges to the assessee
and the entire cost of the property was let
out to the occupants and owner had been
recovered as rent from premises by the
assessee, therefore, could not be said that
the assessee was exploiting the property
for its commercial business activity.

13. In the case of CIT Vs.
Purshottam Dass, reported in 247 ITR
316 property constructed as a residential
unit
was
let
out
to
Government
department was temporary used for office
purpose earlier. Division Bench of Delhi
High Court held that construction was
made for residential purpose in a
residential area and was mere temporary
non-user as residence and consequent
temporary user for office purposes will
not make the rent chargeable as business
income. It has been held that liable to be
taxed as property income.

14. So far as question no. 3 is
concerned, Tribunal has given reasoning
for coming to the conclusion that the rent
from cold storage, motor garage, Raj Oil
Mill and approval charges may be taxed
under head income from business and not
under head income from other sources.
We do not find any error in the view of
the Tribunal.

15. We accordingly, answer the
question nos. 1,2 and 3 in affirmative, i.e.
in favour of the assessee and against the
Revenue. So far as question no.4, which
has been referred at the instance of the
assessee we refuse to answer the said
question in the absence of assessee.

16. In the result, question nos. 1,2
and 3 are answer in affirmative, i.e. in
favour of the assessee and against the
Revenue and question no.4 is returned
unanswered. There shall be no order as to
cost. Question decided affirmative.
---------
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 11.07.2005

BEFORE
THE HON'BLE MRS. POONAM SRIVASTVA, J.

Second Appeal No. 1561 of 2001

Aftab Ahmad ...Defendant-Appellant
Versus
Mohd. Soyab and others

 ...Plaintiff-Respondent

Counsel for the Appellant:
Sri Sankantha Rai
Sri Dr. Vinod Kumar Rai
Sri Vijay Kumar Rai

Counsel for the Respondents:
Sri K.N. Rai
Sri R.C. Upadhyay
Sri Vivek Mishra

(A) Indian Evidence Act, 1872-S.-62 and
68 readwith Mohammdan Law-Section
63,
118-unregistered
will-executedregarding entire property-while other
natural heir were alive-whether can such
will be treated a valid document-which
has been executed against the personal
law? Held-'No' unless the original will
deed filed and attested-finding regarding
title on the basis of such will can not
sustained.

Held: Para 15

I now proceed to examine the effect of
failure of the plaintiff to produce the
original will which is the basis of the suit
and its result. Admittedly in the present
case neither the original unregistered
will dated 3.11.1969 was filed by the
plaintiff
nor
the
execution
and