Tarun Agarwala, J. - (1.) THE main object as per the memorandum and articles of association of the appellant -company is, to carry on the business of hotel, restaurant, cafe, etc. Other objects as elucidated in the memorandum of association is, also to acquire, establish and maintain one or more nursing home, hospitals, clinics, dispensaries, etc. For the purpose of attainment of its objects for carrying on the business of hotels, the petitioner constructed a building and, after construction, it appeared that the assessee could not run the business of the hotel as the building so constructed was found to be located in a remote area and far away from the railway station and it was felt that carrying on the business of hotel was not a feasible business. The Board of Directors of the company passed a resolution dated 12th March, 1989 deciding to run a hospital or a nursing home either under its own supervision or to lease out the building with plant, machineries, generators, lifts or other amenities to any Doctor or to a medical institution. Pursuant to the said resolution, a lease deed was executed in favour of Deva Nursing Home Pvt. Ltd. dated 2nd May, 1989 to lease out the building premises at a monthly rent of Rs. 25,000/ - per month. The building let out was fitted with lifts, generator, tubewell and electrical fittings. The relevant portion of the lease deed is extracted hereunder: - "And whereas the lessor has decided in its meeting held on 2.4.89 to lease out the building to the lessee for the purpose of running a nursing home and the lessee has agreed to take the said building from the lessor on lease on the terms and conditions contained herein.
(2.) FROM the above recital of the lease deed, it is clear that only the building was leased out by the assessee. The rent fixed under the lease and payable by the lessee was for the building and not for any other asset. For the assessment year 1990 -91, the appellant filed its return of income showing a loss of Rs. 64,482/ -. In this return, the appellant claimed that its income was derived by leasing out the building, plant, machineries, generators, lifts and other amenities and such income was income from profits and gains of business of profession.
(3.) THE Assessing Officer did not accept the contention of the appellant and treated the income as income from other sources. The appellant, being aggrieved, filed an appeal before the Commissioner of Income Tax, which was dismissed holding that such income of the assessee was income from house property. The appellant, being aggrieved, filed a second appeal before the Income Tax Tribunal. One member of the Tribunal upheld the order of the Commissioner of Income Tax holding that the income of the appellant was an income from house property, but the other member dissented holding that such income is a business income. On account of difference of opinion between the two members, the matter was referred to the third member of the Tribunal, who opined that the income of the appellant should be assessed as income from house property. In view of the opinion of the third member, the appeal of the appellant was dismissed holding its income as income from house property.;