S. Sankarasubban, J.:— These income-tax references are filed by the assessee against the orders in I.T.A Nos. 387.Coch of 1999, 20.Coch. of 1998 and 21.Coch. of 1998 of the Income-tax Appellate Tribunal, Cochin Bench. The relevant assessment years are 1993–94, 1994–95 and 1995–96.

2. The assessee is a private limited company. It has got a shopping complex called “Attukal Shopping Complex” at Thiruvananthapuram. The object of the shopping complex is to erect shopping complexes, houses, buildings and sell, lease, let out, mortgage or otherwise dispose of the shopping complexes and the houses built. The sale as well as the leasing out or mortgage can be in respect of part of the property or in full. There are various other objects, which are incidental or ancillary to the attainment of the main object of the company. According to the assessee, it acquired an immovable property at South Street, Fort, Trivandrum. After demolishing the existing structure a new shopping complex was put up at a total cost of Rs. 80 lakhs approximately. Funds for the construction included loan from the State Bank of India, Trivandrum, the construction was completed and the business was commenced with effect from April 1, 1992.

3. There are nearly 170 shops, which have been leased out to various tenants, who are doing business in the complex. For maintaining the commercial complex and for administering the common facilities the assessee has twenty employees. The common facilities include electricity in common areas, such as corridors, lamps outside the building and latrines. Separate meters are provided for each shop and paid directly to Kerala State Electricity Board by the enants in respect of energy consumed within shop. Except for 2 or 3 shops like hair dressers, cafeteria, water supply is provided by the assessee. There are three floors in the building and there are six latrines inside the building and four outside. There is an extensive car parking facility for parking nearly 100 vehicles for which specialised concrete flooring has been laid. There are wo security personnel in the rolls of the assessee, who do round the clock surveillance of the entire shopping complex. A separate office is maintained in he office complex to oversee these arrangements. The sanction of the Corporation of Trivandrum has been obtained for putting up a commercial complex. There is no residential accommodation in this complex. Lease agreements have been entered into with the various tenants for a period of three years at a time and the licence fee is split up into licence fee towards the building and licence fee towards the amenities. A return showing a loss of Rs. 10,79,807 was filed on December 31, 1993, i.e, Rs. 1,90,018 is towards business and Rs. 8,80,789 is towards depreciation. The depreciation includes depreciation for the building. The Assessing Officer did not issue any notice under section 143(2) within one year of filing the return. A notice under section 148 was issued on September 29, 1995, followed by a notice under section 142(1) calling for certain specific details. The assessee filed necessary details in support of its claim and also given a detailed note in support of its claim for offering the income under the head “Business”.

4. The Assessing Officer ignored the contention of the assessee and determined he income partly under the head “House property” and partly under “Other sources”. The Assessing Officer, in the process disallowed depreciation on the building. In the process the Assessing Officer relied on the case of Karnani Properties Ltd. v. Commissioner Of Income Tax, West Bengal, [1971] 82 ITR 547 (SC) as also the case of East India Housing and Land Development Trust Ltd. v. CIT, [1961] 42 ITR 49 (SC) and the Andhra Pradesh High Court decision in P.V.G Raju v. CIT, [1967] 66 ITR 122, The total income was determined at Rs. 8,98,430. The assessment was completed under section 144 because according to the Assessing Officer, the assessee did not file a return.

5. Before the Commissioner of Income-tax (Appeals), Trivandrum, the asses-see filed a detailed paper book to emphasise the commercial nature of the property as also distinguished the case law cited by the Assessing Officer. The assessee also cited decisions of this court and the Madras High Court. The Commissioner of Income-tax (Appeals) dismissed the appeals stating among other things that the decision of this court in CIT v. Malabar and Pioneer Hosiery (P.) Ltd., [1996] 221 ITR 117, and the decision of the Madras High Court in CIT v. V.S.T Motors P. Ltd., [1997] 226 ITR 155, are distinguishable. The Commissioner of Income-tax (Appeals) relied on the decision of the Andhra Pradesh High Court in P.V.G Raju v. CIT, [1967] 66 ITR 122 and Karanpura Development Co. Ltd. v. CIT, [1962] 44 ITR 362 (SC) to negative the appellant's claim. In the case of P.V.G Raju v. CIT, [1967] 66 ITR 122 (AP), the property which was used as a market was constructed as far back as in 1876. No licence fee was charged in the beginning. A fee was later charged for providing certain basic amenities to meet the cost of supply. Later the licence fee was increased. The assessee sought assessment of the income as from business, but in view of the circumstances of the case where the assessee was not in the business of hiring out the market, but was only in enjoyment of the income therefrom. The appeals were dismissed, against which the matter was taken before the Tribunal. The Tribunal, by the impugned order, confirmed the order of the assessing authority. It is against that the present appeals have been filed.

6. The following questions of law have been framed:

“(i) Was the Appellate Tribunal right in law and in the facts and circumstances of the case in holding that the income received from the relevant shopping complex is not business income despite the facts that the Assessing Officer has admittedly held a part of the receipts therefrom as business income and that the provision made by the appellant was a business facility complete by organised activity ?

(ii) Was the Appellate Tribunal correct in law in holding that the activity of letting out the rooms in the relevant commercial complexes with annexed and inseparable ancillary services is not a business activity ?

(iii) Was the Appellate Tribunal correct in law in holding that income from shopping complexes is derived only as a result of mere ownership on the property ?

(iv) Was the Appellate Tribunal correct in law in severing on its own accord, the services offered as a separate business activity from that of income from shopping complex ?”

7. The main question for consideration in this case is what is and in which head the income obtained by the assessee stands; whether it is on the income from the property or the income from business. It is in considering these two things that the Commissioner has found out that the income is equally attri-butable to the house property and from business. The assessee's case is that he has constructed 130 flats. These flats are let out and business is being conducted there. According to the assessee, the only source of its income is the income from the property. Learned counsel for the assessee submitted that the assessee is doing activity of letting out building. Learned senior counsel for the Department submitted that in business activity a kind of risk is involved. It is more so in the business of letting out building. In the decision reported in Sultan Brothers P. Ltd. v. CIT, [1964] 51 ITR 353 (SC) : AIR 1964 SC 1389, it was observed thus (headnote of AIR 1964 SC):

“Whether a particular letting is business has to be decided in the circumstances of each case. 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. A thing cannot 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 business because it is concerned with an asset with which trade is commonly carried on.

The object of the assessee-company no doubt was to acquire land and buildings and to turn the same into account by construction and reconstruction, decoration furnishing and maintenance of them and by leasing and selling the same. The activity contemplated in the aforesaid object of the company, assuming it to be a business activity, would not by itself turn the lease in the present case into a business deal.”

8. In Karnani Properties Ltd. v. Commissioner Of Income Tax, West Bengal, [1971] 82 ITR 547 (SC) : (1971) 3 SCC 568 : AIR 1972 SC 2315, it is held as follows (headnote of AIR 1972 SC) “where the Tribunal on evidence before it has come to the conclusion that the assessee has two independent sources of income and on the basis of that finding it has referred certain questions to the High Court under section 66(1), the High Court has no jurisdiction to reappreciate the evidence on record and to come to a conclusion that the assessee has only one source of income and not two as found by the Tribunal”. In CIT v. Malabar and Pioneer Hosiery (P.) Ltd., [1996] 221 ITR 117 (Ker), it is observed as follows (headnote): “A commercial asset can be rightfully exploited by the owner thereof to the best advantage and the advantage can be materialised either by using it himself personally or by letting it but to somebody else. So long as the commercial asset is capable of being exploited as such, it has to be understood that its income is business income.” In Karanpura Development Co. Ltd. v. CIT, [1962] 44 ITR 362 (SC), it is held as follows (headnote):

“Ownership of property and leasing it out may be done as a part of business, or it may be done as land owner. Whether it is the one or the other must necessarily depend upon the object with which the act is done. It is not that no company can own property and enjoy it as property, whether by itself or by giving the use of it to another on rent. Where this happens, the appropriate head to apply is ‘income from property’ (section 9) even though the company may be doing extensive business otherwise. But a company formed with the specific object of acquiring properties not with the view to leasing them as property but to selling them or turning them to account even by way of leasing them out as an integral part of its business, cannot be said to treat them as landowner but as trader. In deciding whether a company dealt with its properties as owner, one must see not to the form which it gave to the transaction but to the substance of the matter.”

9. In the above view of the matter, we find that the income from the building forms part of the business and property. Thus, we hold that the Tribunal was right in holding that the income of the assessee has to be divided as income form the property and income from the business. In that view of the matter, we uphold the order of the Tribunal. The questions are answered in favour of the Department and against the assessee.