HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income-tax, Bombay City-I, Bombay v. National Storage Pvt. Ltd., Bombay
Civil Appeals Nos. 1048-1051 of 1966
[1967] 3 SCR 813 ·
Indian Income-tax Act, 1922: sections 2(4), 6, 9, 10 and 66A(2) · Cinematograph Film Rules, 1948
Sources & disclosures includedDownload original judgment / order
3-judge bench; unanimous judgment delivered by S. M. Sikri, J. · J. C. Shah, J. · S. M. Sikri, J. · V. Ramaswami, J.
Assessment years: 1953-54, 1954-55
01 · Facts of the case
National Storage was promoted after the Cinematograph Film Rules, 1948 required distributors to store films in compliant godowns. It bought approved land at Mahim and built thirteen units, each divided into specialised vaults with examination space, fire-proof doors and other prescribed features. Agreements restricted use to storing and handling films. Vault-holders retained their individual vault keys, while National Storage exclusively held the common entrance key and provided a fire alarm, railway booking offices, a canteen, telephone access and staff. Earlier years had been assessed under section 10, but for 1953-54 and 1954-55 the Income-tax Officer and Appellate Assistant Commissioner applied section 9. A Tribunal majority and the Bombay High Court treated the receipts as business income (SCR pp.814-817; PDF pp.2-5).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
The 1922 Act treated the heads in section 6 as mutually exclusive, with classification governed by practical commercial notions. Section 9 excluded property occupied by the assessee for a business whose profits were taxable, and section 10 covered an adventure or concern in the nature of trade (SCR pp.818-819; PDF pp.6-7). National Storage did more than exploit bare ownership: it constructed a regulated film-storage complex, maintained specialised safety and transport facilities, employed staff and controlled access. The agreements were licences, not leases, and the assessee remained in occupation while carrying on the integrated concern. The hired subject was a complex commercial facility, so the return arose from the concern rather than property rights alone. On those facts the Act did not support taxing a rental component under section 9 and a service component under section 10 (SCR pp.819-820; PDF pp.7-8).
Source: Primary judgment: discussion
03 · Judicial decision
The Court upheld the High Court's section 10 classification and dismissed Civil Appeals Nos. 1048-1051 of 1966 with costs (SCR p.820; PDF p.8).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of National Storage Pvt. Ltd. Its receipts from the integrated film-vault operation were business income under section 10, not property income under section 9 (SCR pp.819-820; PDF pp.7-8).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: for a property-versus-business classification, document who controls and occupies the premises, whether customers receive exclusive possession, the specialised capital configuration, mandatory services, staffing and the commercial object of the composite receipt. National Storage is strongest where the property is the operational instrument of an integrated concern, not where services are merely incidental to a conventional letting. Recheck the currently governing provisions before reliance (based on SCR pp.818-820; PDF pp.6-8).
Source: Primary judgment: reviewPoint
Source & verification
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Statutory scope
The classification arose under mutually exclusive heads in sections 9 and 10 of the repealed Indian Income-tax Act, 1922 and on a specialised 1948 film-storage arrangement. It does not determine present head-of-income treatment for ordinary leases, warehouses or service arrangements. No current-law or comprehensive later-treatment clearance was undertaken.
Later treatment
Source checked 2026-10-11. Later judicial treatment and current statutory applicability have not been comprehensively checked; no current-law or citator clearance is represented.
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