M/S CHENNAI PROPERTIES & INVEST. LTD. vs COMMR. OF INCOME TAX CENTRAL III,T.N.

The Supreme Court ruled that the income derived by the appellant from letting out properties should be classified as income from business rather than income from house property under the Income Tax Act. The Court emphasized that the primary objective of the appellant company, as per its Memorandum of Association, was to acquire and let out properties, thus establishing a business activity. The Court overturned the High Court's decision, which had relied on precedents such as 'East India Housing and Land Development Trust Ltd. v. Commissioner of Income Tax' and 'Sultan Brothers (P) Ltd. v. Commissioner of Income Tax', and held that the income should be taxed as business income under Section 28 of the Income Tax Act.