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TMI Blog1970 (12) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... he entered into an agreement with the Export Promotion Council to lease the second floor and part of the first floor of the building to the Council. The terms and conditions of the lease are contained in a letter dated July,16, 1962, written by the Chairman of the Council to the assessee. This letter is annexure " A " to the reference, and it reads: Dear Sir, Please refer to your letter dated 22nd June, 1962, and the further discussions you have had with us regarding the hiring of the building under construction for the use of the Export Promotion Council. We are prepared to hire the entire second floor covering an area of 5,200 sq. ft. and the portion of the 1st floor covering an area of 2,400 sq. ft. approx. on the following terms and conditions : 1. The accommodation will be hired in the name of the Cashew Export Promotion Council, who shall have the right to sublet the accommodation to any party they choose. 2. The total rent for the portion hired will be Rs. 2,350 (rupees two thousand three hundred and fifty only) per mensem. 3. You will provide the necessary partitions as indicated in the drawing attached to this letter. 4. You will provide the necessary lavatorie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court in Sultan Brothers Private Ltd. v. Commissioner of Income-tax before the Tribunal in support of his contention. Referring to this decision, the Tribunal stated that the admitted fact that the assessee did not provide an electric lift as stipulated in the agreement and that the, rent was consequently reduced showed " that the plant, furniture and the building were not let out inseparably ". Counsel for the assessee, submitted that the conclusion of the Tribunal cannot be sustained on the authority of the above decision of the Supreme Court, and that the lease evidenced by annexure "A" fell within clause (iii) of sub-section (2) of section 56 of the Act. It is necessary to refer to some of the provisions of the Act to examine this contention. Section 4 contains the charging provision; and the charge is on the total income of the previous year. "Total income" is defined as the total amount of the income referred to in section 5, computed in the manner laid down in the Act. Section 14 classifies all income under several heads for the purpose of computation of the total income. That section reads : " 14. Heads of income.-Save as otherwise provided by this Act, all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in clauses (ii) and (iii) of sub-section (2) of section 56. These deductions are much larger than the deductions allowed in the case of income from buildings failing under the head " Income from house property ". That is why the assessee seeks to bring the income from his building under clause (iii) of sub-section (2) of section 56. The legislative history of the above provisions would throw considerable light on the purport of these provisions. They correspond to sub-sections (3) and (4) of section 12 of the Indian Income-tax Act, 1922 Sub-section (3) was-inserted in that Act by section 13 of the Indian Income tax (Amendment) Act, 1939, while sub-section (4) was inserted by section 7 of the Indian Income-tax (Amendment) Act, 1941. Sub-section (3) deals with income from machinery, plant or furniture let on hire ; while subsection (4) deals with income from the same things, viz., machinery, plant or furniture let on hire along with buildings, where the letting of the one is inseparable from the letting of the other. By enacting sub-section (3) income from letting of machinery, plant or furniture was brought under the head " Income from other sources " ; and consequently that inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary lavatories, closets, etc., or a building with water supply or with electric fans or even with electric lights would be a case falling under clause (iii). It is impossible to accede to this contention. There is no dispute that income from letting of a house falls under the head "Income from house property". No building would be fit for habitation without some of the above amenities. The extent of the amenties may vary, depending upon several considerations. If the above contention was right, income from letting of a building can never fall under the head " Income from house property ", unless the building is one without any of the amenities, which is necessary to make it habitable. It is not possible to treat a building separate from the fittings therein which go along with it as part thereof. Items (i) to (vi) which the assessee has provided in the building as per the lease agreement are fittings in the building and form parts of the building. Therefore, the agreement evidences only a letting of the building and income therefrom falls under the head " Income from house property ". That being so, it cannot fall under the head " Income from other sources ". Clause (iii) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a residuary head of income ". Dealing with the question whether it was such a letting, the court said " What, then, is inseparable letting ? It was suggested on behalf of the respondent-Commissioner that the sub-section contemplates a case where the machinery, plant or furniture are by their nature inseparable from a building so that if the machinery, plant or furniture are let, the building has also necessarily to be let along with it. There are two objections to this argument. In the first place, if this was the intention, the section might well have provided that where machinery, plant or furniture are inseparable from a building and both are let, etc. The language, however, is no that the two must be inseparably connected when let, but that the letting of one is to be inseparable from the letting of the other. The next objection is that there can be no case in which one cannot be separated from the other. In every case that we can conceive of, it may be possible to dismantle the machinery or plant or fixtures from where it was implanted or fixed and set it up in a new building. As regards furniture, of course, they simply rest on the floor of the building in which it lies an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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