RAJ DADARKAR & ASSOCIATES versus ACIT-CC-46
[2017] 4 S.C.R. 20, Supreme Court of India, 2017
Outcome: Dismissed (Dismissed)
Segment: Ratio
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[20 i 7] 4 S.C.R. 20 
RAJ DADARKAR & ASSOCIATES 
v. 
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ACIT-CC-46 
(Civil Appeal Nos. 6455-60of2017) 
MAY09,2017 
[A. K. SIKRI AND ASHOK BHUSHAN., JJ.] 
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Income Tax Act, 1961: 
SS. 22 and 27(iiib) - Assessee firm took leasehold rights of 
stilt area of a portion of a building in auction, on monthly licence -
To .. run municipal market -After constructing the market area, gave 
the same to various persons on sub-licensing basis - Income from 
the sub-licensed shops whether would be assessed under the head 
"Profits and Gains of Business or Profession" or under the head 
"Income from House Property" - Held: The assessee would be 
treated as deemed owner of the premises in terms of s.27(iiib) and 
hence its income from the sub·licensed shops in the premises is liable 
to be assessed under the head "Income from House Property'.'. 
Tax/Taxation: 
E 
Income tax - Nature of - Held: Income tax is only one tax 
F 
G 
H 
which is levied on the sum total of the income classified and 
chargeable under various heads - It is not collection of distinct 
taxes levied separately on each head of the income._ 
, Dismissing the appeals, the Court 
HELD: 1. It is not in dispute that having regard to the terms 
and conditions on which the leasehold rights were taken by the 
appellant in auction, constructed the market area thereupon aud 
gave the same tO various .persons on sub-licensing basis, the 
appellant would be treated as deemed o_wner of these premises 
in terms of Section
27(iiib) of the Income Tax Act. The High Court 
took note of the provisions of Section 27(iiib) as well as Section 
269UA(t) of the Act. [Para 10] (27-D] 
2. Section 14 of t_be Act enumerates five beads of income 
for the purpose of charge of income tax and computation of total 
income. These are: Salaries, Income from house property, Profits 
20
RAJ DADARKAR & ASSOCIATES v. ACIT - CC-46 
and gains of business or profession, Capital gains and Income 
from other sources. A particular income, therefore, has to be 
classified in one of the aforesaid heads. It is on that basis rules 
for computing. income and permissible deductions which arc 
contained in different provisions of the Act for each of the aforesaid 
· heads, are to be applied. [Para 13) [29-C-D) 
3. Income tax is only One Tax which is levied on the sum. 
total of the income classified and chargeable under the various 
heads. It is not a collection of distinct taxes levied separately on 
each head of the income. [Pam 13) (29-E] 
4. There may be instances where a particular income may 
appear tQ fall in more than one head. Wherever there is an income 
from leasing out of premises and iCOllecting rent, normally such 
an income is to be treated as in'Chme from house property, in 
case provisions of Section 22 of the Act arc satisfied with primary 
ingredient that the assessee is the owner of the said building or 
lands appurtenant thereto. 'Owner of the house property' is 
defined in Section 27 of the Act which includes certain situations 
where a person not actually the owner shall be treated as deemed 
owner of a building or part thereof. In the present case, the 
appellant is held to be "deemed owner" of the property in 
question by virt~e of Section 27(iiib) of the Act. On the other 
band, under certain circumstances, where the income may have 
been derived
from letting out of the premises, it can still be 
treated as business income if letting out of the premises itself is 
the business of the asscsscc. [Para 14) [29-E-F, G-H; 30-B) 
5. Merely because there is an entry in the object clause of 
the business showing a particular object, would not be the 
determinative factor to arrive at a conclusion that the income is· 
to be treated as income from business. Snch a question would 
depend upon the circumstances of each case. Even otherwise, 
the object clause which. is contained in the partnership firm is to 
take the premises on rent and to sub-let. In the present case, 
reading of the object clause would bring out two discernible facts, 
i.e. (a) the business activity is of taking the premises on rent and 
sub-letting them and (b) partnership firm may take any other 
business as may be mutualiy agreed upon by the partners. [Paras· 
15 and 16) (30-D, G-H; 3l·A-C) 
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SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
Sultan Bros. (P) Ltd. v. CIT, [1964) 5 SCR 807 - followed. 
6. Apart from relying upon the clause in the partnership 
deed to show its objective, the appellant has not produced or 
referred to any material. On the other hand, ITAT had specifically 
adverted to this issue and recorded the findings on this aspect. 
The ITAT being the last forum insofar as factual determination is 
concerned, its findings have attained finality. The appellant did 
·not make any efforts to show as to how the findings were perverse. 
It was for the appellant to produce sufficient material on record 
to show that its entire income or substantial income was from 
letting out of the property which was the principal business activity 
of the appellant. [Paras 17 and 18) [31-D; 32-B] 
Chennai Properties and Investments Limited, Chennai 
v. Commissioner of Income Tax Central !IL Tamil Nadu 
& Anr. [2015) 4 SCR 413 : 2015 (14) SCC 793; Raya/a 
Corporation Private Limited v. Assistant Commissioner 
of Income Tax (2016) 15 SCC 201 - held inapplicable. 
Karanpura Development Co. Ltd. v. CIT (1962) 44 ITR 
362; East India Housing and Land Development Trust 
Ltd. v. CIT (1961) 42 ITR 49 - referred to. 
Case Law Reference 
-< 
·-
J2015J 4 SCR413 
held inapplicable 
Paras 12, 19 
(2016) 15 sec 201 
held inapplicable 
Paras 12, 19 
J1964J 5 SCR 807 
followed 
Para 15 
(1962) 44 ITR 362 
referred to 
Para 19 
(1961) 42 ITR 49 
referred to 
Para 19
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 64SS-
6460 of2017. 
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~ From the Judgment and Order dated 19.09.2014 of the High Court 
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ofJudicature at Bombay in I. T.A. No. 588, 713, 720, 721, 722 & 723 of 
2012. 
Salil Agarwal, Bhargava V. Desai, Ms. Saumya Mehrotr!I, Uma 
Shankar, Adv. for the Appellant. 
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RAJ DADARKAR & ASSOCIATES v. ACIT - CC-46 
23 
Maninder Singh, ASG, Rupesh Kumar, T. M. Singh, Mrs. Anil Katiyar, 
A 
Advs. for the Respondent. 
The Judgment of the Court was delivered by 
A. K. SIKRI, J. 1. The substantial questions of law which have 
been raised .Qy the appellant in these appeals, which wlre also the •. , 
questions before the High Court on which High Col!rt has r~ndered the~. B 
impugnedjudgment, are the following: 
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"( 1) Whether in the facts and circumstarices of the case, and in 
law, the Tribunal erred in holding that the appellant was owner of 
the shopping centre within the meaning of Section 22 read with 
Section 27 of the Income Tax Act, 1961? 
(2) Whether in the facts and circumstances of the case, and in 
law, the Tribunal was right iri holding that the income earned by 
the appellant from the shopping centre was required to be taxed 
under the head "income from House Property" instead of the 
head "Profits and Gains from the Business or Profession" as 
claimed by the Appellant? 
(3) Whether on the facts and circumstances of the case, and in 
law, the order of the Tribunal, confirming the action of the 
Respondent, is perverse inasmuch as the same is based on 
surmises, conjectures and suspicions by taking into account 
incorrect, irrelevant and extraneous consideration while ignoring 
relevant materials and considerations?" 
2. Few facts giving the background in' which aforesaid questions 
have arisen for consideration, may
first be taken note of. These are 
recapitulated hereinafter: 
The Maharashtra Housing and Developing Authority ("MHADA") 
_ had constructed buildings known as Shyam Sunder Cooperative Society, 
Ram Darshan Cooperative Society and Sindhu Coo-perative Society at 
Jariwala Compound Market, Opposite Navjivan Post Office, Lamington 
Road, Mumbai - 400088. However, there was a reservation for 
Municipal retail market on the plot on which MHADA had put up the 
construction. Therefore, MHADA handed over the ground floot [stilt 
portion] of the above ~aid buildings and admeasuring around 17,925 sq. 
ft. (hereinafter referred to as the "market portion") to Market Department 
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SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
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of Municipal Corporation Greater Bombay ("MCGB"). This land was 
acquired by the MCGB from the MHADA by recovering the necessary 
cost. 
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3. In 1993, the Market Department of the MCGB auctioned the 
market portion on a monthly license [ stallage charges] basis to rim 
municipal market." The appellant firm participated in the auction to acquire 
the right to conduct the market on the market portion. The appellant was 
the successful bidder and was handed over possession of the market 
portion on 28.05.1993. The terms and'conditio1,1s subject to which the 
appellant was given the said market portion to run and maintain municipal 
market contained in the terms and conditions of the auction dated 
11.03 .1993. The premises allotted to the appellant was a l,Jare structure, 
on stilt; that is, pillar/column, sans even four walls. In terms of the auction, 
it was the appellant who had to make the entire premises fit to be used 
· a market, including construction of walls, construction of entire common 
amenities Ii.ke toilet blocks, etc. Accordingly, after taking possession of 
the premises, the appellant spent substantial amount on additions/ 
alternations of the entire premises, including demolishing the existing 
platform and, thereafter, reconstructing the same according to the new 
plan sanctioned by the MCGB. [Rs. 1,83,61,488/- spent from Financial 
Year 1'993-1994 to 2001-2002] The appellant constructed 95
shops and 
30 stalls of different carpet areas on the pr~mises under the market 
name "Saibaba ShoppingCentre". The appelTant also obtained, in terms 
of the conditions of the auction, necessary registration certificate for 
running a business under the Shop and Establishment Act ,and other 
licenses/permissions from MCGB and other Government and semi-· 
Government bodies for carrying on trading activities on the said premises. 
The appellant firm was responsible for day-to-day maintenance, 
cleanliness and upkeep of the market premises. The appellant also had 
to incur/pay water charges, electricity charges, taxes and repair charge.s. 
Essentially, the appellant collected the following types of receipt 
from the sub-licensees: 
(a) Compensation from sub-licensees [same rate of stallage 
charges and on the same terms and condition as given to the 
appellant the MCGB]. 
(b) Leave & License fees. ·
~--
RAJ DADARKAR & ASSOCIATES v. ACIT - CC-46 
25 
[A. K. SIKRI, J.l 
(c) Service Charges for providing various services, including 
A 
security charges, utilities, etc. 
4. The. appellant filed the returns of income and right from th.e 
year 1999 till 2004, it had been offering the income from the aforesaid 
shops and stalls sub-licensed by it under the head "Profits and Gains of 
Business or Profession" of the Income Tax.Act, 1961 (hereinafter referred 
to as the 'Act'). The income was also assessed accordingly. However, 
the case of the appellant for the Financial Year 1999-2000 was reopened 
by the respondent by issuing notice under Section 148 of the Act and in 
response to the same ~he appellant filed its return on 12.12.2003. 
Thereafter; notice under Section 143(2) of the Act dated. 10.01.20.05 
was issued and served by the respondent. Reassessment order. was 
framed, computed the income from the shops, and the stalls under head 
"Income from House Property" of the Act. The reasons given by the 
respondent for so computing the income under the head "Income from 
House Property" were: 
· 
(i) By virtue of Section 27(iiib) of the Act, the appellant was 
"deemed owner" of the premises as it had acquired lea.sehold 
right in the land for more than 12 years; 
, 
(ii) In agreements for sub-licensing the words "lease 
compensation" were used instead of ~'license fees" and 
deposits were referred as "sub-lease deposits". Further, in 
some correspondence, like loan
application, etc., the words, 
"lease" were used; 
(iii) Property tax has been levied on the appellant. 
Accordingly, the respondent held that the income received by the 
~~pellant from the market stalls was assessable as "Income from House 
Property" under the Act. 
• 
5. Being aggrieved by the above mentioned reassessment order 
dated 29.03.2005, the appellant filed an appeal before the Commissioner 
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of Income Tax (Appeals) ["CIT (Appeals)"] on 13.04.2005. The CIT 
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(Appeals) allowed the appeal of the appellant and reversed the action of , 
the respondent on 30.12.2005'. Aggrieved by the order dated 30.12.2005 
of the CIT (Appeals), the respondent as well as appellant filed appeals 
before the Income Tax Appellate Tribunal ("!TAT"). The !TAT reversed 
the orderof the CIT (Appeals) and confirmed the action of the Assessing 
H
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SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
Officer vide its decision dated 10.09 .2009. Being aggrieved by the order 
of the ITAT, the appellant preferred an appeal before the High Court. 
The High Court, by the impugned order dated 19.09.2014, dismissed the 
appeal filed by the appellant. 
6. It is this judgment of the High Court against which present 
appeals, via Special Leave to Appeal, have been filed. 
7. The learned counsel for the appellant submitted that the High 
Court, or for that matter the ITAT, committed grave error in approaching 
the entire matter from an erroneous angle. Referring to the discussion 
contained in the impugned judgment, the learned counsel pointed out 
that the High Court confined its discussion only on one aspect viz. as to 
whether the appellant was 'deemed owner' of the properties in question 
within the meaning ofSection27(iiib) of the Act and after holding it to be 
so, it treated the Income as "income from house property". The learned 
counsel argued that the ~ntire focus of the High Court was on the aforesaid 
aspect and, in the process, it was totally ignored that the main business 
of the appellant was to take the premises on rent and to sub-let those 
premises. Thus, sub-letting the premises was the business .of the appellant 
firm and income earned, as a result, was the business income. 
8. In order to support the aforesaid contention, Mr. Agarwal, 
learned counsel for the appellant, referred to the deed of
partnership 
firm of appellant which was constituted on 02.04.1993 under the 
provisions of Indian Partnership Act. He referred to the object clause 
of the firm as per the partnership deed, which reads as under: 
"The Partnership shall take the premises on rent and to sub-let or 
any other business as may be mutually agreed by the parties from 
time to time." 
According to him, it was in furtherance of the aforesaid object 
that, as a business activity, the appellant participated in the auction held 
by a Market Department of the MCGB. Thus, the sole intention of the 
appellant was to establish a retail hub wherein various small retailers 
could come together and carry on their business in an organised and 
systematic manner. Thus, sub-licensing the premises was only a part of 
this predominan!..Qbjectofthe appellant. This was the sole and the only 
activity of the appellant. The appellant,· being a partnership firm, 
maintained full and complete records of!hese business activities. Right 
"-~.:.. ..
RAJ DADARKAR & ASSOCIATES v. AClT - CC-46 
[A. K. SIKRI, J.] 
from the year 1999 till 2004, the appellant had been offering the income 
from the shops and stalls sub-licensed by it under the head "Profits and 
Gains of Business or Profession" of the Act. 
9. Mr. Maninder Singh, learned Additional Solicitor General, on 
the other hand, refuted the aforesaid arguments by referring to the order 
of the Assessing Authority and submitted that the appellant had argued 
before the Assessing Officer that it was not the lessee of the market 
area but was only a licensee and, therefore, deeming provisions of Section 
27(iiib) of the Act would not apply. This argument was rightly rejected 
by the Assessing Officer. He also referred to the order of the !TAT 
which had specifically repelled the argument that this income was 
business income. Therefore, no question oflaw arises for determination. 
10. We have considered the aforesaid submissions of counsel for 
the parties in the light of legal provisions contained iil the Act. We may 
remark at the outset that it is not in dispute that having regard to the 
terms and conditions on which the leasehold rights were taken by the 
appellant in auction, constructed the market area thereupon and gave 
the same to various persons on sub-licensing basis, the appellant would 
be treated as deemed owner of these premises in tenris of Section 27(iiib) 
of the Act. We may point out that the High Court took note of the provisions 
of Section 27(iiib)
as well as Section 269UA(f) of the Act which reads 
as under: 
"Section 27(iiib) - a person who acquires any rights (excluding 
any rights by way of a lease from mo11th to month or for a period 
not exceeding one year) in or with respect to any building or part 
thereof, by virtue of any such transaction as is referred to in clause 
(f) of section 269UA, shall be deemed to be the owner of that 
building or part thereof; 
Section 269UA(f) - "transfer",-
(i) in relation to any immovable property referred to in sub-
clause (i) of clause (d), means transfer of such property by 
way of sale or exchange or lease_for a term of nqt less than 
twelve years, and includes allowing the possession of such 
property to be taken or retained in part performance of a 
contract of the nature referred to in section 53A of the 
Transfer of Property Act, 1882 (4of1882). 
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SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
Explanation.-Forthe purposes of this sub-clause, a lease 
which provides for the extension of the term thereof by a 
further term or terms shall be deemed to be a lease for a 
term of not less than twelve years, if.the aggregate of the 
term for which such lease is to be granted and the fwiher ,.....,_ 
term or terms for which it can be so extended is not less than 
twelve years ; 
(ii) in relation to any immovable property of the nature referred 
. to in sub-clause (ii) of clause (cl), means the doing ofanything 
(whether by way of admitting as a member of or by way of 
transfer of shares in a co-operative society or company or 
other association of persons or by way of any agreement or 
arrangement or in any other manner whatsoever) which has 
the effect of transferring, or enabling the enjoyment of, such 
property." 
· 11. Thereafter, the High Court pointe~ out the circumstances under 
which the Market Department ofMCGB had auctioned the market area 
wherein the appellant was the successful tenderor; the BMC permitted 
sub-letting of the shops and stalls in stilt portion; the appellant was 
permitted to carry out additions and alterations which he did; the manner 
in which the appellant after making necessary constructions sub-I icensed 
to various types of traders etc. On that basis, the High Court concluded 
that reading of various clauses harmoniously as per which the rights 
were given to the
appellant in the said property, pointed out towards the 
appellant acquiring rights in or in respect of the building or part 
.thereof, which rights were clearly traceable to Section 269UA(f) of the 
Act. 
12. As pointed out above, the aforesaid conclusion is not even 
disputed by the learned counsel for the appellant. The submission was, 
as noted above, even if the appellant is deemed owner of the premises in · 
question, sin ct: the letting out the place and earning rents therefrom is 
the main business activity of the appellant,• then the income generated 
from sub-licensing the market area and earned by the appellant should 
be treated as income from business and not income .from the house 
property. His submission was that the dominant test has to be applied 
and once it is found that dominant intention behind the activity was that 
of a business, the rental income would be business income. In support, 
Mr. Agarwal referred to the following two judgments:
RAJ DADARKAR & ASSOCIATES v. ACIT - CC-46 
29 
[A. K. SIKRI, J.] 
(i) Chemuti Properties (Ind Investments Limited, Chennai v. 
A 
Commissioner of Income Tax Centr(I/ Ill, T"mil Nadu & 
Anr., (2015) 14 sec 793. 
(ii) Ray(l/a Corporation Private Limited v. Assisf(lnf 
Commissioner of Income Tax, (2016) 15 SGC 20 I. 
13. Before dealing with the respective contentions, we may state, 
in a summary form, scheme of the Act about the computation of the 
total income. Section 4 of the Act is the charging Section as per which 
the total income of an assessee, subject to statµtory exemptions, is 
chargeable to tax. Section -H pf the Act enumerates five heads of income 
for the purpose of charge of income tax and computation of total income. 
These are: Salaries, Income from house property, Profits and gains of 
business or profession, Capital gains and Income from other sources. A 
particular income, therefore, has to be classified in one of the aforesaid 
heads. It is on that basis rules for computing income and permissible 
deductions which are contained in different provisions of the Act for 
each of the aforesaid heads, are to be applied. For example, provisions 
for computing the income from house property are contained in Sections 
22 to 27 of the Act and profits and gains of business or profession are to 
be computed as per the provisions contained in Sections 28 to 44DB of 
the Act. It is also to be borne in mind that income tax is only One Tax 
which is levied on the sum total
of the income classified and chargeable 
under the various heads. It is not a collection of distinct taxes levied 
separately on each head of the income. 
14. There may be instances where a particular income may appear. 
to fall in more than one head. These kind of cases of overlapping have 
frequently arisen under the two heads with which we are concerned in 
the instant case as well, namely, income from the house property on the 
one hand and profits and gains from business on the other hand. On the 
facts of a particular case, income has to be either treated as income 
from the house property or as the business income. Tests which are to 
be applied for determining the real nature of income are laid down in 
judicial decisions, on the interpretation of the provisions of these two 
heads. Wherever there is an income from leasing out of premises and 
collecting rent, normally such an income is to be treated as income from 
house property, in case provisions ofSection 22 of the Act are satisfied 
with primary ingredient that the assessee Is the owner of the said building 
or lands appurtenant thereto. S~ction 22 of the Act makes 'annual value' 
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SUPREME COURT REPORTS 
(2017] 4 S.C.R. 
of such a property as income chargeable to tax under this head. How 
annual value is to be determined is provided in Section 23 of the Act. 
'Owner of the house property' is defined in Section 27 of the Act which 
includes certain situations where a person not actually the owner shall 
be treated as deemed owner of a building or part thereof. In the present 
case, the appellant is held to be "deemed owner" of the property in 
question by virtue-of Section 27(iiib) of the Act. On the other hand, 
under certain circumstances, where the income may have been derived 
from letting out of the premises, it can still be treated as business income 
if letting out of the premises itself is the business of the assessee. 
15. What is the test which has to be applied to determine whl!ther 
the income would be chargeable under the head "income from the house 
property" or it would be chargeable under the head "Profits and gains 
from business or profession", is the question. It may be mentioned, in 
the first instance, that merely because there is an entry in the object 
clause of the business showing a particular object, would not be the 
determinative factor to arriV;e at a conclusion that the income is to be 
treated as income from busines~. Such a qu~stion would depend upon 
the circumstances of each case'. It is so held by the Constitution Bench 
of this Court in Sultan Bros. (P) Ltd. v. CIT, ( 1964) 5 SCR 807 and we
reproduce the relevartt portion thereof: 
"7 .... We think each case has to be looked at from a businessman's 
point of view to find out whether the letting was the doing of a 
business or the exploitation of his property by an owner. We do 
not further think that a thing can by its very nature be a commercial 
asset. A commercial asset is only an asset used in a business and 
nothing else, and business may be carried on with practically all 
things. Therefore, it is not possible to say that a particular activity 
is bu~iness because it is concerned with an asset with which trade 
is commonly carried on. We find nothing in the cases referred, to 
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support the proposition that certain assets are commercial assets 
in their very nature." 
16. In view thereof, the object clause, as contained in the partnership 
deed, would not be the conclusive factor. Matter has to be examined on 
the facts of each case as held in Sultan Bros. (P) Ltd. case. Even 
otherwise; the object clause which is contained in the partn~rship finn is 
to take the premises on rent and to sub-let. In the present case, reading
RAJ DADARKAR & ASSOCIATES v. ACIT - CC-46 
31 
[A. K. SIKRI, J.] 
of the object clause would bring out two discernible facts, which are as 
A 
follows: 
(a) The appellant which is a partnership finn is to take the premises 
on rent and to sub-let those premises. Thus, the business 
activity is of taking the premises on rent and sub-letting them. 
In the instant case, by legal fiction contained in Section · B 
27(!iib) of the Act, the appellant is treated as "deemed owner". 
(bLThe aforesaid clause also mentions that partnership firm may 
take any other business as may be mutually agreed upon by 
· the partners. 
· 
17. In the instant case, therefore, it is to be seen as to whether the 
activity in question was in the nature of business by which it could be 
said that income received by the appellant was to be treated as income 
from the business. Before us, apart from relying upon the aforesaid 
clause in the partnership deed to show its objective, the learned counsel 
for the appellant has not produced or referred to any material. On the 
other hand, we find that IT AT had specifically adverted to this issue and 
recorded the findings on this aspect in the following manner: 
"26. : .. On this issue facts available on record are that the assessee 
let out shops/stalls to various occupants on a monthly rent. The 
assessee collected charges for minor repairs, maintenance, water 
and electricity. As per the terms of allotnient by the BMC, the 
assessee was bound to incur all
these expenses. The assessee, in 
turn, collected extra money from the allottees. The assessee 
collected 20% of monthly rent as service charges. Such ser\iice 
charges were also used for providing services like watch and 
ward, electricity, water etc. This in our opinion was inseparable 
from basic charges of rent. The assessee has made bifurcation of 
.the receipt from the, occupiers of the shops/stalls as rent and 
service charges. As rightly held by the Assessing Officer, decision 
of Hon'ble Supreme Court in the case of Shambu Investment 
Pvt. Ltd., 263 ITR 143 will apply. The assessee has not established 
that he was engaged in any systematic or organized activity of 
providing service to the occupiers of the· shops/stalls so as to 
constitute the receipts from them as business income. In our 
opinion, the assessee received income by letting out shops/stalls; 
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SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
and therefore, the same has to be· held as income from house 
property." 
18. The ITAT being the last forum insofar as factual determination 
is concerned, these findings have attained finality. In any case, as 
mentioned above, the learned counsel forthe appellant did not argue on 
this aspect and did not make any efforts to show as to how the aforesaid 
findings were perverse. It was for the appellant to produce sufficient 
material on record to show that its entire income or substantial income 
was from letting out of the.property which was the principal business 
activity of the appellant. ·No such effort was made. 
19. Reliance placed by the appellant on the judgments of this Court 
in Cliennai Properties.& Investments Ltd. and Raya/a Corpormion 
(P) Ltd. would be of no avail. In Cl1e1111ai Properties & Investments 
Ltd. where one of us (Sikri, J.) was a part of the Bench found that the 
entire income of the appellant was through letting out of the two properties 
it owned and there was no other income of the assessee except the 
income from letting out of the said properties, which was the business of 
the assessee. On those facts, thi5'>Geurt came to the conclusion that 
judgment of this Court in Karanpura Development Co. Ltil v. CIT, 
,--' 
(1962) 44 ITR362 was applicable and the judgment of this Court in 
East I11dia Housi11g (llld L"11d Developme11t Trust Ltd. v. CIT, ( 1961) 
42 ITR 49 was held to be
distinguishable. In the present case, we find 
that situation is just the reverse. The judgment in East India llousing 
andL"11dDevelopme11t Trust Ltd. which would be applicable which is 
discussed in para 8 of Cllemwi Properties & Investments Ltd. case 
and the reproduction thereof would bring home the point we are 
canvassing: 
"8. With this background, we first refer to the judg1,11ent of this 
Court in East !11dia.Housing and Land Development Trust Ltd. 
case [East India Housing and Land Development Trust 
Ltd. v. CIT, (1961) 42 ITR 49 (SC)] which has been relied upon 
by the High Court. That was a case where the company,was 
incorporated with the object of buying and developing lai1ded 
properties and promoting and developing markets. Thus, the main 
objective of the company was to develop the landed properties 
into markets. It so happened that some shops and stalls, which 
were developed by it, had been rented out and income was derived 
from the renting of the said shops and stalls. In those facts, the
RAJ DADARKAR & ASSOCIATES v. ACIT - CC-46 
[A. K. SIKRI, J.] 
question which arose for consideration was: whether the rental 
income that is received was to be treated as income from the . 
house property or tge income from the business? This Court while 
holding that the income shi;ill be treated as income from the house 
property, rested its decision in the context of the.main objective of 
the company and took note of the fact that letting out of the 
property was not the object of the company at all. The Court was 
therefore, of the opinion that the character of that income which 
was from the house property had not altered because it was 
received by the company formed with the object of developing 
and setting up properties." 
20. In R"yala Corporation (P) Ltd., fact situation was identical 
to the case of C/1enn"i Properties & Investments Ltd. and for this 
reason, R"yala .Corpor"tion (P) Ltd. followed Clienn"i Properties &, 
Investments Ltd., which is held to be inapplicable in the instant casi!.' 
2 h For the aforesaid reasons, we are of the opinion that these 
appeals lack merit and are, accordingly, dismissed with cost. 
Kalpana K. Tripathy 
Appeals dismissed. 
33 
A 
B 
c 
D