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TMI Blog2020 (7) TMI 537X X X X Extracts X X X X X X X X Extracts X X X X ..... ble from the building and for exploitation or use of the workstation, the use of the building is incidental. We find that Ld. CIT(A) has also relied on the decision of Garg Dyeing and Processing Industries [ 2012 (12) TMI 191 - DELHI HIGH COURT] wherein as held that where the letting was inseparable, section 56(2)(iii) was rightly invoked. In the case of Shambhu Investment [ 2003 (1) TMI 99 - SC ORDER] the issue of taxability of the rental income under the head income from house property vis- -vis income under the head profit and gains of business and profession , whereas in the present case dispute between the parties regarding the lease rental income should be taxed under the head income from house property or under the head income from other sources . - Decided against assessee. - ITA No.5352/Del./2019 - - - Dated:- 21-7-2020 - Shri Bhavnesh Saini, Judicial Member And Shri O.P. Kant, Accountant Member For the Appellant : Shri Rajeev Saxena, Adv. For the Respondent : Shri R.K. Gupta, Sr.DR ORDER PER O.P. KANT, AM: This appeal by the assessee is directed against order dated 20/03/2019 passed by the Ld. Commissioner of Income-tax (Appeals) - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting of the building in view of the decision of the Hon ble Supreme Court in the case of Sultan Brothers (P) Ltd. versus CIT (1964) 51 ITR 353(SC). The Learned Assessing Officer accordingly disallowed the standard deduction claimed under section 24 (a) of the Act at the rate of the 30% i.e. amounting to ₹ 6,75,000/- from the rental income of ₹ 22,50,000/- and assessed the rental income of ₹ 22,50,000/-under the head income from other sources as against claim of the assessee under the head income from house property . On further appeal, the Learned CIT(A) upheld the action of the Assessing Officer relying further on the decision of the jurisdictional High Court in the case of Garg Dyeing and Processing Industries versus ACIT(supra). Aggrieved with the finding of the Learned CIT(A) in the impugned order, the assessee is in appeal before the Tribunal raising the sole ground of the appeal of denying the standard deduction of ₹ 6,75,000/- which was claimed by the assessee under section 24(a) of the Act. 3. Before us, the Learned Counsel of the assessee appeared through videoconferencing facility and filed a paper-book containing pages 1-60. The paper-book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding is inseparable from the letting of the said machinery, plant of furniture, the income from such a letting, if it is not chargeable under the head profit in gains of business or profession , then it shall be chargeable to the head income from other sources . 5.2 In the case of Sultan Brothers P. Ltd (supra), under similar provisions of the 1922 Act, the Hon ble Supreme Court held that when a building and plant, machinery or furniture are inseparably let, the Act contemplates the rent from the building as a residuary head of income. The Hon ble Court then analysed the meaning of the word inseparable letting as under: 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely reserved in the lease but that does not, in our view, make the two lettings separable. We may point out that the Tribunal has taken the same view and the High Court has not dissented from it. In spite of the sums payable for the enjoyment of two things being fixed separately, the intention may still be that the, two shall be enjoyed together. We will now refer to the provisions in the lease to see whether the parties intended that the furniture, fixtures and the building shall all be enjoyed together. Clause 1 of the lessee's covenant, in our opinion, puts the matter beyond doubt and it is as follows:- 1. (a) To use the demised premises and the said furniture and fixtures for the purpose of running hotel, boarding and lodging house, restaurant, confectionary and such other ancillary businesses as are usually or otherwise can be conveniently carried on with the said business in the said premises such as providing show-cases show windows, newspaper stall, dancing and other exhibition of arts, meeting rooms etc., and not for any other purpose without the previous permission in writing of the Lessors. It is clear from this clause that the building and the fixtures and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which says that the major repair to or replacement of the furniture, shall be made by the lessor. Such repair or replacement may, of course, be necessitated in a case where the furniture or fixtures are damaged by fire. We, therefore, think that the clauses in the lease on which the respondent relies do not indicate that the letting of the building was separable from the letting of the furniture and fixtures. We think that the lease satisfies all the conditions for the applicability of s. 12(4) and is covered by it. In the result we answer the question framed thus: The rent from the building will be computed separately from the income from the furniture and fixtures and in the case of rent from the building the appellant will be entitled to the allowances mentioned in sub-sec. (4) of s. 12 and in the case of income from the furniture and fixtures, to those mentioned in sub-s (3), and that no part of the income can be assessed under s. 9 or under s. 10. The judgment of the High Court is set aside. The appellant will be entitled to the costs here and below. 5.4 In the case of CIT vs. Shambhu Investment Pvt. Ltd s case (249 ITR 7), which was approved by Hon ble Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause 3 of the term of the lease as under: 3. The Lessor has also provided .certain, amenities and facilities/fixtures/fittings .A- (in short Amenities Facilities ) in the Demised Premises to the Lessee under the Lease as details/specified in the Annexure I, which the Lessee confirms and acknowledges. 5.7 A list of such other amenities has been provided in Annexure-I (available on page 29 to 34 of the paper book), includes reception desk in the reception area, executive chairs in directors room, chairs and tables in halls, on the ground floor. Similar facilities and amenities including conference room, managers room and server room on first floor have been provided to the second party. 5.8 We further find that rent of the demised premises has also been fixed in terms of the workstation and not as area of the building. The relevant clause of the lease agreement is reproduced as under: 1. In consideration of the Lessor leasing the Demised Premises to tire Lessee, the Lessee shall pay to the Lessor monthly rent of ₹ 2,50,000/- (Rupees Two Lakhs and Fifty Thousand Only) for 50 workstations @ ₹ 5,000/- per workstation, plus Service Tax Cess am ..... X X X X Extracts X X X X X X X X Extracts X X X X
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