K.N.Seth, J. - (1.) At the instance of the revenue the following question has been referred for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in holding that income from letting out of plant, machinery, building, etc., constituted an element of business activity and was, therefore, to be taxed under the head 'Business' instead of 'Other sources' ?"
(2.) The question relates to the lease money of Rs. 5,555 in the assessment year 1972-73.
(3.) The assessee-company was promoted, inter alia, to purchase, erect, construct, set up, acquire and take over flour mills. The factory buildings were erected and machinery was in the process of installation till 31st August, 1964. The company was informed by the Ministry of Commerce and Industry, Govt. of India, that no licence was required for the process of milling under the provisions of the Industries (Development and Regulation) Act, 1951. Subsequently, there was a notification dated June 21, 1963, which changed the position and the company had to obtain a licence. Some difficulties were encountered in getting the requisite licence and in the meantime, in December, 1964, Sri Rajindra Nath, the moving spirit behind the company, died and his wife, Smt. Vimla Devi, was made the managing director of the company. The company had in the meantime engaged the services of a miller and also secured electric power connection for the flour mill. It had also arranged with the Regional Director of Food for the supply of imported wheat. The company had also made arrangements for the appointment of selling agents and sub-agents and arranged for loan and cash credit facilities from the Central Bank of India. On account of the difficulties encountered in obtaining the licence for running the mill the company by a deed dated June 16, 1965, leased out the mill to M/s. Rajasthan Traders for a period of five years. The lessee obtained the licence for running a flour mill and started the mill in July, 1965. Ultimately, the lease was surrendered on the expiry of the period of lease in September, 1970. The company thereafter was able to secure a licence and started running the flour mill itself.;