Letting of building with furniture taxed under separate heads; building income fell as property income, not business income.

Income from a let building was not taxable as business income because the letting was not shown to be a business venture and the property was not exploited as a business asset. The statutory scheme distinguished property income under section 9 from business income under section 10 and other-source income under section 12. Section 12(3) applied to letting of machinery, plant or furniture on hire, while section 12(4) applied to a building only where the primary letting was of machinery, plant or furniture and the building was let inseparably with it. Accordingly, the building income fell under section 9, the furniture and fixtures income under section 12(3), and none was assessable under section 10.

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Issues: (i) Whether income from the letting of the building and the furniture and fixtures was assessable under section 10 of the Income-tax Act, 1922, or under sections 9 and 12 of that Act.

Analysis: The letting was not shown to be a business venture, and no material supported the contention that the property was exploited as business asset income so as to attract section 10. Section 9 governed income from property, section 10 governed business income, and section 12 governed income from other sources. Section 12(3) extended certain depreciation and allowance benefits to an assessee letting machinery, plant or furniture on hire. Section 12(4), added later, extended similar treatment to buildings only where the primary letting was of machinery, plant or furniture and the letting of the building was inseparable from that primary letting. The statutory scheme did not permit treating the building income under section 10 merely because the building was let with furniture and fixtures, nor did inseparability alone suffice unless the primary letting was of the specified movable assets.

Conclusion: The income from the building was chargeable under section 9, the income from furniture and fixtures under section 12(3), and no part of the income was taxable under section 10.

Ratio Decidendi: Where a building is let together with furniture or fixtures, section 12(4) applies only if the primary letting is of machinery, plant or furniture and the building is let inseparably with it; otherwise, the building income falls under the property head and the furniture income under section 12(3).

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