9911796707
|
Home
Issues:
1. Computation of income derived from letting a building and furniture under Income-tax Act. 2. Application of sections 9, 10, and 12 of the Income-tax Act in the assessment. 3. Interpretation of clauses (3) and (4) of section 12 for allowances in income computation. 4. Primary letting of furniture and fixtures versus the building in the lease agreement. 5. Consideration of inseparability of lettings for qualifying benefits under specified clauses of section 10(2). Analysis: The case involved the assessment of income derived from letting a building and furniture by a limited company under the Income-tax Act. Initially, the Income-tax Officer assessed the income under section 12 of the Act. However, subsequent assessments for the years 1952-53 and 1953-54 raised questions on whether the income should be computed under sections 9, 10, or 12. The Tribunal was approached, and the issue was referred to determine the proper computation of income under the Act. The Court analyzed the provisions of sections 9, 10, and 12 of the Income-tax Act. It emphasized that section 10 pertains to income from business, while section 12 deals with income from other sources, including letting of machinery, plant, or furniture. The Court highlighted the significance of clauses (3) and (4) of section 12, which provide for specific allowances in certain scenarios related to letting of assets by the owner. Regarding the primary letting in the lease agreement, the Court rejected the argument that the furniture and fixtures were primarily let out over the building. It emphasized that the building itself was the subject of the lease, with furniture and fixtures being installed to facilitate its use as a hotel or lodging house. The Court dismissed the contention that the primary letting was of furniture, based on the lease terms and purpose of the property. The Court further discussed the condition of inseparability of lettings for qualifying benefits under specified clauses of section 10(2). It clarified that for the lessor to benefit from the allowances under section 10, the primary letting must be of machinery, plant, or furniture, with the letting of buildings being inseparable. The Court emphasized that mere inseparability of lettings is not sufficient to qualify for benefits under section 10. In conclusion, the Court held that the income from the building would be computed under section 9, while the income from furniture and fixtures would fall under section 12(3). It ruled out any part of the income being taxable under section 10. The assessee was directed to bear the costs of the Commissioner, with no order on the notice of motion.
|
