Case: Karnani Properties Ltd Vs. Commissioner Of Income Tax, West Bengal

to constitute the relation of landlord and tenants, and the owners remained in possession and occupation of their property. The receipts derived from hiring out their premises along with various movable fittings, and affording services in the way of heating, lighting and attendance were receipts of an enterprise quite distinct from the ordinary receipts which a landlord derives from letting his property. Consequently the owners of the premises were rightly held to be engaged in the carrying on of a trade or business in their premises, "the trade or business" in Lord Shaws language at p. 37 (Ibid at p. 593) of providing or providing for public entertainment. There is nothing to prevent a landlord who has been assessed under Schedule A in respect of his income as a property owner being also assessed under Schedule D in respect of a trade business or other enterprise carried on by him on his premises". 12. We are referring to these observations only to show that the activities of the assessee with which we are concerned in these appeals are business activities. We should not be understood as having laid down that in assessing the profits and gains of a business, the profits and gains arising from the several activities of that business can be separately computed or separately brought to tax.If the facts are as found by the Tribunal we must assume for the purpose of this case that the facts were correctly found by the Tribunal as there was no challenge to the correctness of those findings in the question referred to the High Court, then it is quite clear that the assessee had two sources of income and not one source as found by the High Court. 13. Mr. Manchanda, learned Counsel for the Department contended with some emphasis that there was no justification for the Income-tax Officer, the Appellate Assistant Commissioner as well as the Tribunal for coming to the conclusion that the services rendered by the assessee was an activity independent of letting out the premises to the tenants. According to him the primary activity of the assessee was to let out the premises and the services rendered were merely incidental. In support of his contention he relied on the ratio of the decision of this Court in Commr. of Income Tax Bombay City v. National Storage Private Ltd. 66 ITR 596 = (AIR 1968 SC 70 ). He alternatively contended that the income said to have been realised as a result of rendering the services by the assessee should have been brought to tax under Section 12 (4). For that contention he relied on the decision of this Court in Sultan Bros. Pvt. Ltd. v. Commr. of Income-tax, Bombay City II. (51 ITR 353 = (AIR 1964 SC 1389 )).The High Court after reassessing the evidence on record has also taken the view that there was only one source of income and that source was of letting out the premises to the tenants. Mr. Manchanda contended, and the High Court has accepted that contention that the authorities under the Act have not properly construed the lease deeds nor have they properly appreciated the evidence on record. It may well be so. We say nothing about it as it is not within our province to reappreciate the evidence on record. The question as to the correctness of the facts found by the Tribunal was not before the High Court nor is it before us. When the question referred to the High Court speaks of "on the facts and the circumstances of the case", it means on the facts and circumstances found by the Tribunal and not about the facts and circumstances that may be found by the High Court. We have earlier referred to the facts found and the circumstances relied on by the Tribunal, the final fact finding authority. It is for the Tribunal to find facts and it is for the High Court and this Court to lay down the law applicable to the facts found. Neither the High Court nor this Court has jurisdiction to go behind or to question the statements of facts made by the Tribunal. The statement of the case is binding on the parties and they are not entitled to go behind the facts found by the Tribunal in the Statement -See Kshetra Mohan Sannyasi Charan Sadhukhan v. Commr. of Excess Profits Tax. West Bengal, (24 ITR 488 = (AIR 1963 SC 516 )). 14. Mr. Manchanda was apprehensive that our decision in this case may have far reaching effect inasmuch as that the same may be considered as having laid down the rule that whenever a premises is let out with fixtures and furniture for a consolidated rent or when the landlord in addition to providing fixtures and furniture also renders services incidental to the letting out of the premises and charges a consolidated rent, it may be considered that the rent realised would have to be split up and assessed separately partly under Section 9 and partly under some other provision. There is no basis for this apprehension. Herein we are not considering any abstract proposition of law. We are only laying down the law applicable to the facts found. 15. It was next urged by Mr. Manchanda that our decision in this case may preclude the Department from reconsidering the correctness of the findings reached by the Income-tax Officer. Appellate Assistant Commissioner and the Tribunal in the assessees case in the subsequent years. This apprehension may again be not well founded. Generally speaking the rule of res judicata does not apply to taxation proceedings. We have not gone into the correctness of the findings of fact reached by the Tribunal. Therefore whether those facts and circumstances were correctly found or not may still be a matter for consideration in any future assessment. We do not wish to say anything more on this aspect as we do not want to pronounce on questions which are not before us.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]10. From the facts found by the Tribunal it follows that the services rendered by the assessee to its tenants were the result of its activities carried on continuously in an organized manner with a set purpose and with a view to earn profits. Hence those activities have to be considered as business activitiesWhen the question referred to the High Court speaks of "on the facts and the circumstances of the case", it means on the facts and circumstances found by the Tribunal and not about the facts and circumstances that may be found by the High Court. We have earlier referred to the facts found and the circumstances relied on by the Tribunal, the final fact finding authority. It is for the Tribunal to find facts and it is for the High Court and this Court to lay down the law applicable to the facts found. Neither the High Court nor this Court has jurisdiction to go behind or to question the statements of facts made by the Tribunal. The statement of the case is binding on the parties and they are not entitled to go behind the facts found by the Tribunal in the Statement -See Kshetra Mohan Sannyasi Charan Sadhukhan v. Commr. of Excess Profits Tax. West Bengal, (24 ITR 488   = (AIR 1963 SC 516  ))14. Mr. Manchanda was apprehensive that our decision in this case may have far reaching effect inasmuch as that the same may be considered as having laid down the rule that whenever a premises is let out with fixtures and furniture for a consolidated rent or when the landlord in addition to providing fixtures and furniture also renders services incidental to the letting out of the premises and charges a consolidated rent, it may be considered that the rent realised would have to be split up and assessed separately partly under Section 9 and partly under some other provision. There is no basis for this apprehension. Herein we are not considering any abstract proposition of law. We are only laying down the law applicable to the facts foundAppellate Assistant Commissioner and the Tribunal in the assessees case in the subsequent years. This apprehension may again be not well founded. Generally speaking the rule of res judicata does not apply to taxation proceedings. We have not gone into the correctness of the findings of fact reached by the Tribunal. Therefore whether those facts and circumstances were correctly found or not may still be a matter for consideration in any future assessment. We do not wish to say anything more on this aspect as we do not want to pronounce on questions which are not before usProperty is regarded as yielding income from the exercise by the proprietor of the right either of himself with the possession by letting his property to tenants. The owner of property may make profit out of it in other ways and by doing so he may render himself liable to taxation under Sch. D. The case ofs of the Rotunda Hospital, Dublin v. Coman. (1921) I.A.C.1, is an excellent example. There as Lord Chancellor Lord Birkenhead pointed out at page 8 (7 Tax Cases 517 at page 576) the arrangements between the owners of the premises and the persons who paid for their use for the purpose of entertainments were not such as to constitute the relation of landlord and tenants, and the owners remained in possession and occupation of their propertyThe receipts derived from hiring out their premises along with various movable fittings, and affording services in the way of heating, lighting and attendance were receipts of an enterprise quite distinct from the ordinary receipts which a landlord derives from letting his propertyConsequently the owners of the premises were rightly held to be engaged in the carrying on of a trade or business in their premises, "the trade or business" in Lord Shaws language at p. 37 (Ibid at p. 593) of providing or providing for public entertainment. There is nothing to prevent a landlord who has been assessed under Schedule A in respect of his income as a property owner being also assessed under Schedule D in respect of a trade business or other enterprise carried on by him on his premises"12. We are referring to these observations only to show that the activities of the assessee with which we are concerned in these appeals are business activities. We should not be understood as having laid down that in assessing the profits and gains of a business, the profits and gains arising from the several activities of that business can be separately computed or separately brought to tax.If the facts are as found by the Tribunal we must assume for the purpose of this case that the facts were correctly found by the Tribunal as there was no challenge to the correctness of those findings in the question referred to the High Court, then it is quite clear that the assessee had two sources of income and not one source as found by the High Court.