COMMISSIONER OF INCOME TAX Vs. B NAGI REDDI

JUDGEMENT

(1.) IN this reference under section 256(2)of the INcome-tax Act, 1961 (hereinafter referred to as "the Act"), at the instance of the Revenue, the following questions of law have been referred for the opinion of this court in respect of the assessment year 1971-72. "(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the income received by the assessee from Vahini Studios and Vijaya Studios should be assessed in the hands of the assessee as 'business income' ?(2) Whether the finding of the Appellate Tribunal is a reasonable view to take on the facts and in the circumstances of the case ?(3) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the fees of Rs. 3, 188 paid by the assessee to the approved valuer for valuing the studios of the assessee for the purpose of wealth-tax assessment was an allowable expenditure under section 37 of the INcome-tax Act, 1961, and the same should, therefore, be allowed for the assessment year 1971-72 ?The assessee is an individual and he was, at the material time, the owner of the two film studios in Madras by name Vijaya Studios and Vahini Studios and he leased them out. The rental income derived by the assessee was assessable as part of the assessee Is total income. The assessee maintained before the INcome-tax Officer and the Appellate Assistant Commissioner that the rental income from the studios in question should be assessed under the head "Business income". This, however, was rejected and the INcome-tax Officer as well as the Appellate Assistant Commissioner assessed the rental income from Vijaya Studios under the head "House property" and that from Vahini Studios under the head "Other sources". On further appeal before the Tribunal by the assessee contending that the rental income from the studios in question for purposes of tax treatment should be regarded as "business income", the Tribunal, relying upon its earlier order in 1. T. A. Nos. 1789 and 1794 dated November 30, 1973, held that the income should be assessed under the head "Business".

(2.) IN that view, even in respect of the assessment year 1971-72, the Tribunal concluded that the rental income derived by the assessee from the studios in question should be assessed under the head "Business" That is how the first question set out earlier has arisenWe may point out that in respect of the same assessee in respect of the assessment years 1963-64 to 1968-69 and 1969-70, the identical question came to be considered by a Division Bench of this court in CIT v. B. Nagi Reddy [1984] 1984 (147) ITR 337, 1983 (34) CTR 151, 1983 (15) TAXMAN 9(to which one of us was a party).

(3.) THOUGH counsel on both sides referred to several other decisions, we are of the view that it is not necessary to make a reference to all of them, since the matter is squarely governed by the decision of the Supreme Court referred to earlier. We, therefore, answer the third question referred to us also in the affirmative and against the Revenue.