Maruthi, J.

The Tribunal referred the following question u/s 256(1) of the Income Tax Act, 1961 for the opinion of this Court at the instance of the revenue :

"Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is justified in holding that the assessee-firm is entitled to the benefit of registration under the Income Tax Act, notwithstanding that the main activity of the assessee was letting out of godowns constructed by it and receiving rental income therefrom, for the assessment years 1979-80 and 1980-81 "

2. The facts in brief are that the godowns constructed by the assessee have been let out to Aries Agro Vet Industries (P) Ltd., the rental income from the godowns has been shown as business income and deductions like depreciation and miscellaneous expenses are claimed. The Income Tax Officer assessed the rental income under business after allowing deductions claimed by the assessee for the assessment years 1979-80 and 1980-81. He also granted registration for the two assessment years. The Commissioner initiated proceedings u/s 263 of the Act. After considering the submissions of the assessee, he cancelled the registration granted by the Income Tax Officer u/s 185(1) of the Act. He directed the Income Tax Officer to recompute the income from letting out of the godowns as income from the property, in accordance with sections 22 to27 of the Act. Against that the assessee filed an appeal. The Tribunal held that the rent received from letting out godown as income from property, however, it held that letting out of godowns can be considered as business for the purpose of partnership and on this issue, the assessee is entitled for continuation of registration; in other words, notwithstanding the fact of income of the assessee, the assessee is still entitled for registration u/s 185(1)(a) of the Act. At the instance of the revenue, the question extracted in the earlier paragraph was referred for the opinion of this Court.

3. The main argument of the learned counsel for the revenue is that this Court in Commissioner of Income Tax, Andhra Pradesh Vs. Phabiomal and Sons, has held that letting out of the building and realising the rents therefrom did not amount to carrying on of business and it was incidental to the ownership in view of the judgment of this Court. The order of the Tribunal having held that the income is to be taxed as income from property ought not to have held that the assessee is entitled for registration u/s 185(1)(a).

4. The assessee contended that he has entered into partnership for the purpose of carrying on construction and letting out the godowns and, therefore, its income is income from business and when once it is income from business, it is entitled for registration u/s 185(1)(a). In support of his contention he relied upon the following decisions :

Nauharchand Chananram Vs. Commissioner of Income Tax, , Prem Trading Co. Vs. Commissioner of Income Tax, , Commissioner of Income Tax, Karnataka, Bangalore Vs. M/s. Shaan Finance (P) Ltd., Bangalore, . He vehemently contended that income from letting out of the godowns is business income and, therefore, they are entitled for registration u/s 185(1)(a). It is difficult to accept the contention of the learned counsel for the assessee because a single act of constructing a godown and letting it out cannot be treated as a business. The expression business contemplates continuous activity from year to year. There is no evidence that the assessee is continuing the activity of constructing godowns and letting them out from year to year. There is no material that he has constructed a godown in this year. Therefore, the income from a simple letting out of the godown cannot be treated as business income for the purpose of the Act. When once it is not business income, the question of availing benefit u/s 185(1)(a) does not arise. The income has to be assessed as income from property in accordance with sections 22 to 26 of the Act. We are fortified in our view by a judgment of this Court in Phabiormal & Sons case (supra), wherein it was held that letting out a building and realising rents therefrom did not amount to carry in on of business. It is true that the Punjab and Haryana High Court in Nauharchand Chananram case (supra) took the view that letting out of a factory amounts to carrying on of business. With respect we disagree with the view expressed by the Punjab & Haryana High Court. The judgment in Commissioner of Income Tax Vs. Lakshmi Company, is distinguishable from the facts of the case. It is a case where the assessee went on putting up additional constructions and letting it out to various tenants which was in the nature of business activity, because, as pointed out in the earlier paragraph, it is a case where there is continuous activity and, therefore, that judgment is distinguishable on facts.

5. The judgment of the Madhya Pradesh High Court in Prem Trading Co.s case (supra) is also similar to the judgment of the Punjab and Haryana High Court in Nuaharchand Chananrams case (supra). The judgment of this Court in Vinod Bhargavas case (supra) is a case where the assessee continued his building activity and had not leased out the entire building but only leased out the plant and machinery. Therefore, it was held that the assessee is entitled to the benefit u/s 32. The said judgment was confirmed by the Supreme Court.

6. The judgment in Shaan Finance (P) Ltd.s case (supra) is also distinguishable on facts. This is a case where the assessee claimed investment allowance u/s 32(A). The scope and interpretation of section 32(A) is settled and it was held that the assessee would be entitled for, investment allowance u/s 32(A). The scope of the judgment is entirely different and it has no application to the facts of this case.

7. In view of the above, we answer the question referred by the Tribunal in the negative and in favour of the revenue. Reference is answered accordingly.