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Issues: (i) Whether the service charges received by the assessee for supplying electricity, using lifts, supplying water, maintaining staircases and providing watch and ward to tenants were assessable as income from other sources and not as income from house property. (ii) Whether depreciation on fans fitted in the tenanted portions was allowable as a deduction in computing the income from service charges.
Issue (i): Whether the service charges received by the assessee for supplying electricity, using lifts, supplying water, maintaining staircases and providing watch and ward to tenants were assessable as income from other sources and not as income from house property.
Analysis: The service charges were found to be separately stipulated and separately received from rent. The amenities supplied were not part of the normal letting of the building but represented a distinct receipt for services rendered to occupants. The case was treated as falling within the principle that rent and charges for amenities may constitute different heads of income where the receipts are separately identifiable and not merely incidental to the ownership of the property.
Conclusion: The service charges were correctly assessable as income from other sources and not as income from house property, in favour of the assessee.
Issue (ii): Whether depreciation on fans fitted in the tenanted portions was allowable as a deduction in computing the income from service charges.
Analysis: Although income from service charges was held to fall under income from other sources, the entitlement to depreciation could not automatically follow. The Tribunal had not recorded findings on the factual basis necessary to determine whether the statutory conditions for such deduction were satisfied, and the record did not justify a conclusive answer on the depreciation claim.
Conclusion: No opinion was expressed on the claim for depreciation on fans, and the question was declined to be answered.
Final Conclusion: The reference was answered in favour of the assessee on the characterization of service charges, while the depreciation question remained unanswered for want of necessary findings.
Ratio Decidendi: Where receipts for amenities supplied by a landlord are separately identified from rent and arise from distinct services rendered to tenants, such receipts may be assessed as income from other sources and not as income from house property.
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