Composite letting of building and plant falls under section 12(4), while retained possession keeps rent assessable as house property income.

Where premises are let together with fixtures, fittings and air-conditioning plants as one composite and inseparable demise, the rent is assessed under section 12(4) of the Income-tax Act, 1922, because the building rent cannot be split from the rent attributable to the plant and related items. Where the lease terms show that the building and plant were intended to form a single letting and rent was payable as one arrangement, the composite rental falls within that provision. By contrast, where conveyance recitals and possession records show that the owner retained possession and the asserted transfer in part performance was not established, the rental income remains assessable as income from house property under section 9.

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Issues: (i) Whether the rent from premises No. 8, Clive Row, including fixtures, fittings and air-conditioning plants, was assessable under section 12(4) of the Income-tax Act, 1922, on the basis that the letting of the building was inseparable from the letting of the machinery, plant or furniture. (ii) Whether the rental income from premises No. 62, Hazra Road, was rightly assessed under section 9 of the Income-tax Act, 1922.

Issue (i): Whether the rent from premises No. 8, Clive Row, including fixtures, fittings and air-conditioning plants, was assessable under section 12(4) of the Income-tax Act, 1922, on the basis that the letting of the building was inseparable from the letting of the machinery, plant or furniture.

Analysis: The lease treated the building and the fixtures, fittings and air-conditioning plants as part of one composite demise, with separate rent fixed only for accounting convenience. The same lease term applied to both, the rents were payable together, and the parties' arrangement showed that the building and the plant were intended to be let as one inseparable unit. The expression used in the lease covered items that fell within the ordinary meaning of machinery or plant. On that footing, the rent from the building could not be split from the rent attributable to the plant and fixtures, and the scheme of section 12(4) governed the assessment.

Conclusion: The entire rental income from premises No. 8, Clive Row, was rightly assessed under section 12(4), and the answer was in favour of the assessee.

Issue (ii): Whether the rental income from premises No. 62, Hazra Road, was rightly assessed under section 9 of the Income-tax Act, 1922.

Analysis: The conveyance documents and recitals showed that the owner remained in possession of the premises at the relevant time and did not support the claim that possession had passed in part performance of an agreement for sale. On those facts, the property continued to be assessable as income from house property under section 9.

Conclusion: The rental income from premises No. 62, Hazra Road, was rightly assessed under section 9, and the answer was in favour of the revenue.

Final Conclusion: The references were disposed of by upholding assessment under section 12(4) for the Clive Row property and under section 9 for the Hazra Road property, with one proposed question left unanswered as not having been decided by the Tribunal.

Ratio Decidendi: Where a building is let together with machinery, plant or furniture as one composite and intended inseparable letting, the rent falls within section 12(4); where the owner retains possession and title in the relevant manner, the property income remains assessable under section 9.

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