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TMI Blog1990 (8) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... ing facility was to be borne by the lessee. Similarly, the assessee was at his own cost to provide in the premises with an automatic two-speed eight-passenger lift. The charges in respect of power consumed for the lift was to be borne by the lessee. The lessee was at liberty to make internal modifications and to put up fixtures and partition etc. according to their own requirements. In consideration of these terms the lessee was to pay a total sum calculated at Rs. 2.35 per month per sq. ft. of the carpet area, which was to comprise of rental charges of Rs. 1.50 per month per sq. ft. of the carpet area and 0.85 per month per sq. ft. of carpet area for air-conditioning and other amenities. The lessee was also to give to the assessee a sum of Rs. 15,00,000 as interest-free advance, which was to be adjusted against monthly rental payments at the rate of Rs. 18,000 per month from the date of occupation. The assessee was to bear all the taxes in respect of the property and in case of increase in taxes, the rent may be proportionately increased after ten years. Similarly, if any additional floors were to be constructed, the lessee was to be given the first option on the same terms at a n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borrowed capital. The CIT(A), however, confirmed the view of the ITO that the entire income should be assessed as income from house property. But, he was of the view that the estimate of the income was somewhat excessive and he reduced it to Rs. 7,20,000 at the rate of Rs. 3 per sq. ft. per month. He also upheld the disallowance of the claim for deduction of interest. 5. In the further appeal before us it was contended on behalf of the assessee that in terms of the agreement between the assessee and the lessee the provision of the air-conditioning equipment and lifts were independent of the leasing out of the property and, therefore, the entire income could not be assessed under the head "income from property". It was further submitted that since it was a transaction at arm's length, the amount actually received represented the market value and, therefore, there is no necessity to estimate the income from property. It was pointed out that an adjacent building at No. 143, Nungambakkam High Road, Madras had been let out at Rs. 1.32 per sq. ft. p.m. and another premises in No. 603, Anna Salai, Madras at Rs. 2.50 per sq. ft. p.m. and hence, the rent actually received could not be reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the two practically one letting? Would one have been let alone, and a lease of it accepted, without the other? If the answers to the first two questions are in the affirmative, and the last in the negative, then it has to be held that it was intended that the lettings would be inseparable." When we look into the agreement, even though the answers to the first two questions are in the affirmative, we find that the answer to the last question is not in the affirmative. The agreement provided that the lessor shall guarantee the working of electrical and power points, provision of air-conditioning facility and other amenities to be as per specifications approved by the lessee and to the satisfaction of the lessee, which indicated that the intention was to take the building with the air-conditioning equipment and the lift, which was part of the plan approved by the lessee. However, the agreement did not provide any specific provision as to who should maintain the air-conditioning plant and the lift except for stating that the charges in respect of power consumed for these equipments will be borne by the lessee. Moreover the fact that separate rent was to be paid for these equipment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d only under the head "income from house property". The decision of the Calcutta High Court in the case of Indian City Properties Ltd. v. CIT [1978] 111 ITR 19 has referred to the decision of the Kerala High Court cited above, but upheld the assessment of the amounts attributable to lifts and air-conditioning charges as was done in the assessment order. Since the finding in that case was that there was no separate letting of, the lift or air-conditioning plant, the amount attributable to such equipment was not included in computing the income from property. In the present case, however, we find that there was a letting of the building along with air-conditioning and lift facility forming part of the building as such. The only amount payable was bifurcated. Such a bifurcation does not take it out of the scope the income from property. 9. We also have the benefit of the recent decision of the Supreme Court in the case of Puspa Sen Gupta v. Susma Ghose [1990] 2 SCC 651, wherein it was held that rent under the Rent Control Legislation includes payments in respect of amenities and services provided by landlord. In that case it was pointed out that where the tenant defaults in payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is in Nungambakkam High Road but which may be a little away. The annual value determined by the Corporation of Madras is not available. As we can see from the section, what has to be assessed is only the annual value and the actual rent is to be assessed only, if it is in excess of the annual value. Since it is not the case of the Revenue that the annual value determined by the Municipal Corporation is less than the actual rent received, we have to assess the income only under section 23(1)(b). 11. The question still remains as to what is the annual rent actually received. We find from a perusal of the agreement that the assessee received not only the rent, but also an interest-free loan of Rs. 25 lakhs. It has been held by the Supreme Court in the case of Bhagwan Dass Jain v. Union of India [1981] 128 ITR 315 that even in its ordinary economic sense, the expression "income" includes not merely what is received or what comes in by exploiting the use of a property but also what one saves by using it oneself. Therefore, the interest saved by the assessee in respect of the borrowed capital would also be income and has to be taken into account under section 23(1)(b). Even at the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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