SULTAN BROTHERS (P) LTD. versus COMMISSIONER OF INCOME-TAX

Citation: [1964] 5 S.C.R. 807 · Decided: 06-12-1963 · Supreme Court of India · Bench: BHUVNESHWAR PRASAD SINHA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

. 5 S.C.R. 
. SUPREME COURT REPORTS 
807 
to see' that the fence which under the Act it was his 
1963 
duty to see was kept in position all along had not 
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been . removed. It seems to us clear that if it was State 0! Gujarat 
his duty to exercise due diligence for the purpose in a 
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case where he could establish that somebody else 
Jetha1'!1 
had removed the fence, it would be equally his duty Chelabha•. P<:!el 
to exercise that diligence where he could not prove 
Sarkar J .. : 
who had removed it. If it were not so, the intention 
of the Act to give protection to workmen would be 
wholly defeated.· · 
For these. reasons we are unable to agree with th~ 
view of the High Court or the learned trial magisttate. 
Accordingly we allow the appeal and set aside the 
judgment of the Courts below and convict the res-
pondent under s. 92 for contravening the terms of 
s. 2l{l){iv)(c). We impose on him a fine of Rs. 
200. In default he. shall undergo one week's simple . · 
imprisonment. 
Appeal allowed. 
SULTAN BROTHERS (P) LTD. 
v. 
COMMISSIONER OF INCOME-TAX 
(B.P. SINHA, C.J., A.K. SARKAR, M. HIDAYA'Tfill!AH, 
K.C. DAS GUPTA AND N; RAfAGOPALA 'AYYANGAR 
JJ.) 
. 
Income Tax-Assessment-Letting of building and furniture-
Such letting, if business-Income Tax Act, 1922 (11 of 1922), ss. 
JO, 12(4). 
. 
. . 
The appellant assessee Jet out a building fully equipped and 
furnished, for a term of six years for running a hotel and for certain 
ancillary purposes. The lease provided for a rent for the building 
and a hire for the furniture and fixtures. In the assessment of the 
income under· the lease to income-tax, 
. Held: Whether a particular letting is business has to be decid· 
ed in the circumstances of each case. It would not be'..the doing 
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December 6 
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808 
·SUPREME COURT REPORTS 
[1964] 
... ·.• 
'1963 
of a'·business if it was exploitation of his property by an owner. 
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.. 
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~ A thing cannot by its very nature be a commercial asset. A com-
. Sultan Broth eh mercial asset is only an asset used in a business and nothing else . 
.(eJ't.td. 
A:i acti~ity is no~ business becaus~ it is concerned with an asset 
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with which trade 1s commonly camed on. 
' c~/nm~~iolz~i 
. The present letting of the building did not amount to the 
of Jncomi.tax · doing of a business by the assessee and as such the income under 
·" . ·'··. c. 
the lease could not be assessed under s. JO of the Income-tax Act 
as the income of a business. 
·Commissioner of Income-tax v. Mangalagiri Sri Umamaheswara 
Gin and Rice Factory Ltd. (1927) I.L.R. 50 Mad. 529 and Commis-
sioner of Income-tax v. Basotto Brothers Ltd . . Madras. (1940) 
8 I.T.R. 41, distinguished. 
· · 
United Commercial ·Bank Ltd. v. Commissioner of Income-
. tax, West Bengal, 32 I.T.R. 688. referred to. 
Even'if the object of the assessee, ~-conipany,.which was to 
~cquire lands and buildings. and to tum them into account by 
leasing, be assumed to be a business activity, that would not turn 
the income from the lease to income from business. · · . . . . • . · · 
· East Indian Housing & Land Development Trust Ltd. v. Com-
missioner of Income-lax, (1961) 42 I.T.R. 49, relied on. 
The income from the hire of the furniture and fixture was 
assessable under s. 12 of the Act· after providing for the allow-
ances mentioned in sub-s. (3) of that section. 
Sub-section ( 4) of s. 12 is not confined to a case where the 
building let out does.not belong to the person' who let it out. 
The income contemplated in sub-s. (4) ·of s. 12 is an income 
which does not come within any of the earlier sections dealing 
with specific. heads of income . 
. . . In order that sub-s. (4) of s. 12 may apply, it is not necessary 
that the primary!ettingmust be of the machinery, plant or furniture 
· and together with such letting there_ is a letting of the building. · 
When sub-s. (4) of~. 12 says that "the letting of the buildings 
is inseparable from the letting of the said machinery, plant or 
furniture" it only means that the parties to the letting must have 
so intended. There would be such an intention when they were 
intended to be· enjoyed: together .. 
.• . .. C1Vir,, ·A.PPEl'.LATE JURISDICTION·: 
Civil Appeal 
No .. · 63 of 1961. 
. Appeal from the judgment and order dated July 2, 
1959; of the· Bombay High Court in Income-tax 
. Reference· No. 59/1958. 
5 S.C.R. 
SUPREME COURT REPORTS 
809 
A. V. Viswanatha Sastri, T.S. 
Diwanji, O.C. 
1963 
Mathur, J.B. Dada
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