Of the property lease transaction the objects in the memorandum or deed alone may not decide the head under which lease income is assessable.
The assessee firm in the case citation (2019] 418 ITR 681W (All) were engaged in real estate business by its name and object clause in the P deed and further assessed for its leasing /rental income under the head business in immediate preceding year.
In the year subsequent the AO after re-appreciating 10-year lease agreements held a view that the rental income therefrom is required to be assessed as income from other sources/property head especially noting that no day to day expenses were incurred or services were rendered by the firm to receive the rent and that only one person was employed for management and maintenance of leased property thus indicating no regular or continuous activity .
In this case the assessee acquired leasehold rights over a commercial property from borrowed funds for further lease to GAIL for a period of ten years.
To elaborate on what is business the Court brushed aside object clause in the deed and rather looked at the intention and conduct and held the assessee did not carry out any systematic, recurring and organised business activity nor there was any volume, frequency, continuity and regularity of transactions, and only one person was employed for the management and look after of the leased property.