ADDITIONAL COMMISSIONER OF INCOME TAX Vs. HINDUSTAN MACHINE TOOLS LIMITED

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Bangalore Bench, has referred the following question for the opinion of this court :

(2.) THE question arises in relation to the assessment for the assessment year 1966-67, the previous year being the one ended with March 31, 1966. THE assessee is the Hindustan Machine Tools Ltd. It constructed an Industrial estate with the object of having ancillary units which would manufacture components required for the purposes of the machines in the manufacture of which it was engaged. It had constructed 50 sheds. THEse had been leased out to several persons on a rental basis. THE question arose as to whether the income from those sheds should be treated as income from property under s. 22 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), or as business income under s. 28 of the Act. THE ITO held that as the assessee was the owner of the sheds, the income therefrom should he brought to tax under s. 22 of the Act. On appeal, the AAC disagreed with him and held that the income should be computed under the head "business" under s. 28 of the Act. On a further appeal the Tribunal upheld the view taken by the AAC. At the instance of the CIT, the above question has been referred to this court.

(3.) IT is also stated :