In Brief
Rayala Corporation, a private limited company that leased its properties to generate rental income, challenged the High Court's decision that this income should be taxed as "Income from House Property". The Supreme Court held that where a company's sole business activity is leasing and renting properties, such income qualifies as "Profits and Gains of Business or Profession" rather than mere house property income. The classification depends on whether letting is part of trading operations. Following the principle in Chennai Properties v. CIT, the Court allowed the appeal and directed that the assessee's income be taxed as business income.
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