The main legal point established in the judgment is the determination of whether income from leasing of property should be assessed as business income or income from property, based on the nature of the property, the activities conducted, and the intention of the assessee in leasing the property.

( 1 ) AT the instance of CIT, Tribunal has referred three questions 1, 2, 3 and at the instance of assessee, Tribunal has referred the following question, which is marked as question No. 4 under section 256 (2) of the IT Act, 1961 (hereinafter referred to as "the Act"), for opinion of this Court relating to the asst. yrs. 1987-88 and 1988-89: "1. Whether, on the facts and in the circumstances of the case, the Honble Tribunal was correct in holding that income from leasing of Balrampur Lodge to SBI, was assessable as business income and not as income from house property?

( 2 ) WHETHER, on the facts and in the circumstances of the case, the Honble Tribunal was correct in holding that expenses incurred on Nainital property be allowed as business expenses ignoring the fact that these expenses were not at all related to business activity ?

( 3 ) WHETHER, on the facts and in the circumstances of the case, the Honble Tribunal was correct in holding that treatment of receipts from workshop, cold storage, motor garage, Raj Oil Pump and supervision charges of development division should be taxed under the head income from business and not under the head income from other sources ?

( 4 ) WHETHER the Tribunal was justified in law in holding that the bank interest on fixed deposits representing the particular amount received, from UP State Electricity Board against a bank guarantee furnished by the assessee was taxable for the asst. yr. 1987-88 and 1988-89 on the particular facts and circumstances of the case ?" 2. The brief facts of the case are as follows : the assessee-company has income from letting out of house property at Nainital and in addition has lease rent from letting out of workshop, cold storage, motor garage, Raj Oil Pump and interest income plus miscellaneous income. During the year under consideration the assessees, claim (that) income from letting out of Nainital Lodge to SBI on monthly rent of Rs. 22,500/rs. 2,77,410 is business income was rejected and assessed as income from property. Expenses on the property claimed as business expenses were also disallowed. Similarly, receipts from workshop, cold storage, motor garage, Raj Oil Pump, supervision charges of development division, amounting to Rs. 10,416, Rs. 45,000, Rs. 11,321, Rs. 9,000 and Rs. 20,300 for the asst. yr. 1987-88 as well as Rs. 6,250, Rs. 72,000, Rs. 18,781 and Rs. 12,000, respectively, for the asst. yr. 1988-89 were assessed as income from other sources. Aggrieved with the decision of the AO, the assessee preferred appeal before the learned CIT (A), who vide his consolidated order dt. 30th jan. , 1991, has decided the issues against the assessee. Being dissatisfied with the decision of learned CIT (A), the matter was taken up by assessee before Tribunal, who vide its consolidated order dt. 21st Sept. , 1992, has decided the issue in favour of assessee. 3. The contentions of the assessee before the Tribunal, which is referred in the order of the tribunal were as follows :

(i) The entire property is divided into two parts by a Nalla; the main part comprising of the main building and the extensive grounds appurtenant thereto and the other part on the other side of the nalla comprising of outhouses and servant quarters. (ii) Upto asst. yr. 1984-85 the main building was in the possession of the assessee and used as a guest-house and was assessed to tax as business assets. (iii) The guest-house and servant quarters were unauthorisedly occupied by Government servants, etc. the income from which was offered to tax under property. However, for the years under appeal, there is no property income, the assessee has filed eviction proceedings against the unauthorised occupants of the servant quarters. (iv) The assessee in conjunction with PICCUP had got the main building and the property surveyed by an expert and a report from him was received for the conversion of the property into a hotel. (v) During the process of conversion a proposal was received from SBI for the mai

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