Case: Commissioner Of Income-Tax, Bombay City-1, Bombay Vs. National Storage Pvt. Ltd., Bombay

profession or vocation carried on by him." 9. The word business" is defined in S. 2(4) to include any trade, commerce, or manufacture or any adventure or concern in the nature of trade, commerce or manufacture." 10. The question which really arises in the present case is whether the assessee is carrying on any business, i. e., is it carrying on any adventure or concern in the nature of trade, commerce or manufacture? If it is carrying on any adventure or concern in the nature of trade, then Section 9 specifically excludes the income derived from property from computation under Section 9 if the property is occupied for the purpose of adventure or concern. Similar questions have arisen under the English Income-tax Act. Though the scheme of the English Income-tax Act is different, some of the cases throw light on the question as to "what is adventure or concern in the nature of trade." In the Governors of the Rotunda Hospital, Dublin v. Coman, (1919) 7 Tax Cas 517, the Governors of a maternity hospital established for charitable purposes were owners of a building which comprised rooms adapted for public entertainments, and which was connected with the hospital buildings proper by an internal passage. The hospital derived a substantial income from letting the rooms for public entertainments, concerts, etc., for periods varying from one night to six months and applied the income to the general maintenance of the hospital. The rooms were let upon terms which included the provision of seating, heating, and attendance, but an additional charge was made for gas and electricity consumed. The House of Lords held that the profits derived from the letting of the rooms were assessable to Income Tax under Schedule D, either under Case I, as the profits of a trade or business or under Case VI of that Schedule. 11. The learned counsel for the assessee strongly relies on this case. It seems to us that the reasoning of the Law Lords in their speeches does assist the assessee. The Lord Chancellor observed at p. 582:"Profits are undoubtedly received in the present case which are applied to charitable purposes, but they are profits derived not merely from the letting of the tenement but from its being let properly equipped for entertainments, with seats, lighting, heating and attendance. The subject which is hired out is a complex one. The mere tenement as it stands, without furniture etc. would be almost useless for entertainments. The business of the Governors in respect of those entertainments is to have the hall properly fitted and prepared for being hired out for such uses. The profits fall under Schedule D, and to such profits the allowance in question has no application as they cannot be properly described as rents or profits of lands, tenements, hereditaments or heritages. They are the proceeds of a concern in the nature of a trade which is carried on by the Governors, and consists in finding tenants and having the rooms so equipped as to be suitable for letting." In our view the High Court was right in holding that the assessee was carrying on an adventure or concern in the nature of trade. The assessee not only constructed vaults of special design and special doors and electric fittings, but it also rendered other services to the vault-holders. It installed fire alarm and was incurring expenditure for the maintenance of fire alarm by paying charges to the Municipality. Two Railway Booking Offices were opened in the premises for the despatch and receipt of film parcels. This it appears to us, is a valuable service. It also maintained a regular staff consisting of a secretary, a peon a watchman and a sweeper, and apart from that it paid for the entire staff of the Indian Motion Picture Distributors Association an amount of Rs. 800 per month for services rendered to the licensees. These vaults could only be used for the specific purpose of storing of films and other activities connected with the examination, repairs, cleaning, waxing and rewinding of the films. 12. But the learned counsel for the Commissioner says that Section 9 applies because the assessee cannot be said to be in occupation of the premises for the purpose of any concern of its own. He says that the licensees were in possession of the vaults as lessees and not merely as licensees.But, in our opinion, the agreements are licenses and not leases. The assessee kept the key of the entrance which permitted access to the vaults in its own exclusive possession. The assessee was thus in occupation of all the premises for the purpose of its own concern, the concern being the hiring out of specially built vaults and providing special services to the licensees.As observed by the Lord Chancellor in (1919) 7 Tax Cas 517 "the subject which is hired out is a complex one" and the return received by the assessee is not the income derived from the exercise of property rights only but is derived from carrying on adventure or concern in the nature of trade. 13. There is no force in the sixth submission of the learned counsel for the appellant because the Indian Income-tax Act does not contemplate assessment of property under Section 9 in respect of the rental income and assessment under Section 10 in respect of the extra income derived from the carrying on of an adventure or concern in the nature of trade if the assessee is in occupation of the premises for the purposes of the business. The scheme of the English Act is different and special statutory provisions exist in the English Income-tax Act (see Rule 5, Schedule D. English Income-tax Act, 1918). 14. A number of other cases have been cited before us but it is not necessary to deal with them because the answer to the question whether an activity is an adventure or concern in the nature of trade or business must depend upon the facts of each case.

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

Explanation:
0[ds]It is not disputed that the scheme of the Indian Income-tax Act, 1922, is that the various heads of income, profits and gains enumerated in Section 6 are mutually exclusive, each head being specific to cover the item arising from a particular source. Further "whether an income falls under one head or another has to be decided according to the common notions of practical men for the Act does not provide any guidance in the matterIf it is carrying on any adventure or concern in the nature of trade, then Section 9 specifically excludes the income derived from property from computation under Section 9 if the property is occupied for the purpose of adventure or concernIt seems to us that the reasoning of the Law Lords in their speeches does assist the assesseeIn our view the High Court was right in holding that the assessee was carrying on an adventure or concern in the nature of trade. The assessee not only constructed vaults of special design and special doors and electric fittings, but it also rendered other services to the vault-holders. It installed fire alarm and was incurring expenditure for the maintenance of fire alarm by paying charges to the Municipality. Two Railway Booking Offices were opened in the premises for the despatch and receipt of film parcels. This it appears to us, is a valuable service. It also maintained a regular staff consisting of a secretary, a peon a watchman and a sweeper, and apart from that it paid for the entire staff of the Indian Motion Picture Distributors Association an amount of Rs. 800 per month for services rendered to the licensees. These vaults could only be used for the specific purpose of storing of films and other activities connected with the examination, repairs, cleaning, waxing and rewinding of the films12. But the learned counsel for the Commissioner says that Section 9 applies because the assessee cannot be said to be in occupation of the premises for the purpose of any concern of its own. He says that the licensees were in possession of the vaults as lessees and not merely as licensees.But, in our opinion, the agreements are licenses and not leases. The assessee kept the key of the entrance which permitted access to the vaults in its own exclusive possession. The assessee was thus in occupation of all the premises for the purpose of its own concern, the concern being the hiring out of specially built vaults and providing special services to the licensees13. There is no force in the sixth submission of the learned counsel for the appellant because the Indian Income-tax Act does not contemplate assessment of property under Section 9 in respect of the rental income and assessment under Section 10 in respect of the extra income derived from the carrying on of an adventure or concern in the nature of trade if the assessee is in occupation of the premises for the purposes of the business. The scheme of the English Act is different and special statutory provisions exist in the English Income-tax Act14. A number of other cases have been cited before us but it is not necessary to deal with them because the answer to the question whether an activity is an adventure or concern in the nature of trade or business must depend upon the facts of each case.