Warehousing business - Computation of income

This query is : Open

DODARGAD (Querist)
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03 September 2009 Good Evening everybody,

A disputed issue needs suggestions and strong case laws -

ABC Warehouse Pvt. Ltd. has been formed for doing business of warehousing and let out of godown. Its MOA & AOA mentions warehousing business as main business activity. The company is not involved in any other activity.

They have constructed 2 godown buildings simultaneously, by rasing common loan from bank.

1st godown building has been used in for purpose of grain godown warehousing, where various grain bags are kept in safe custody and warehousing rental charges are recovered for the said service from various customers.

The second godown, has been let out on rent for limited period to another company by entering into rent agreement .

My opinion is , income from both the godowns should be taken under the head income from business because the basic objective of company is to conduct business of warehousing & let-out of godown, hence I want to take a stand that godown buildings are used for the purpose of our business and hence will not fall under Income from House Property.

This issue has a record of dispute under income tax and in most of cases, the judgements suggest that such type of income will be taxed under the head of house property.

Kindly share your view on above situation.
Thank You