JAYALAXMI ENTERPRISES Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THESE two appeals arise out of a common order dated 29.4.2002 passed by the Hyderabad Bench of Income Tax Appellate Tribunal (for short, 'the Tribunal') in I.T.A. Nos. 2082 of 1998 and 709 of 1999. The assessee is the appellant.

(2.) THE appellant is a firm, which, in turn, is the assessee under the Income Tax Act. Its activity, as evident from the deed of partnership, is to construct or otherwise acquire godowns and other buildings, to lease them to third parties and to undertake other activities. The appellant constructed godowns and leased them to various agencies including Food Corporation of India. It submitted the returns for the first time in the assessment year 1977 -78. The income earned in the form of rents from the godowns was shown as income from the business. The same was accepted by the assessing officer and deductions permissible in law were allowed. This pattern continued upto 1993.

(3.) THE appellant carried the matter in appeal to the Commissioner of Appeals. The appeal was allowed through order dated 12.9.1996. The Commissioner observed that in a similar matter, he has taken the view that income in the form of rents from godowns must be treated as the one from business. The Revenue filed two appeals before the Tribunal in respect of the two assessment years. It was pleaded that the appellant is the owner of the godowns and leasing of the godowns is almost incidental to ownership and thereby, the income deserves to be treated as the one, from property. After hearing both the parties, the Tribunal allowed the appeals and has set aside the order of the Commissioner. Hence, these appeals are filed under Section 260(A) of the Income Tax Act, by the assessee/appellant.