TaxTMI 
TaxTMI 
1997 (3) TMI 161
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The assessee owns a building at Conran Smith Road, Madras which is leased out to the Postal Department on a monthly rent of Rs. 48,105 as per lease agreement dated 18-5-1983. The assessee received Rs. 4,54,669 by way of rent during the assessment year 1984-85 and Rs. 5,77,260 during the assessment years 1985-86 and 1986-87. The assessee filed returns of income admitting Rs. 1,02,900, Rs. 2,26,467 and Rs. 2,79,450 under ' other sources ' respectively for the assessment years 1984-85, 1985-86 and 1986-87, after claiming deductions towards payment of taxes, interest, etc. It was submitted before the Assessing Officer that the assessee had let out the property alongwith partitions, electrical fittings and lifts etc., and the rent received was not only for the building but also for the amenities provided therein. Therefore, it was requested to allocate the rent towards house rent and also towards amenities provided in the building. The assessee has allocated 3/4th of rent towards property and 1/4th rent towards amenities. The Assessing Officer did not accept the assessee's submissions. On a perusal of the lease agreement, the Assessing Officer found that the assessee has leased out the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hand, supported the orders of the CIT(Appeals). It was contended that the Postal Department wanted certain other facilities such as partition etc. to accommodate maximum number of trainees and therefore, income should be assessed under head ' Income from other sources ' because rent is chargeable not only for the building, but also for the other facilities provided by the assessee like partition, furniture, fittings etc. The ld. counsel for the assessee relied on the following decisions : L. Hirday Narain v. CIT [1965] 57 ITR 363 (AR.) and Assam Biscuit Mfg. Co. Ltd. v. CIT [1990] 185 ITR 535 (Gau.). 5. We have considered the rival submissions, facts of the case and material on record. Under section 14 of the Income-tax Act, 1961 " income " for the purpose of charge of income-tax and computation of total income has been classified under various heads. If a particular income falls under a particular head, then that income has to be assessed under that particular head and not under any other head. Whether an income is to be assessed under a particular head or not, has to be decided on legal principles and not on the basis of the view taken by a particular person or a businessman. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pillars and the total rent for the accommodation as a whole on the above basis would be fixed on the above rent and that the Department agreed for the commencement of the tenancy after completion of the entire building work including provision of lights and fans. Subsequently vide letter date 28-3-1983 the Postal Department agreed for a rent of Rs. 4.50 per sq. ft. for the available carpet area of 10,368 sft. in all the five floors excluding stairs, FOL etc. as agreed upon by joint measurement. The Postal Department in its letter dated 5-5-1983 requested the assessee for certain facilities such as conversion of all European type of WCs into Indian type in each floor, provision of wire mesh type of partitions from the ceiling for about 2 feet for cross ventilation in the partitions provided to the inmates of the hostel etc. After considering the correspondence between the Post & Telegraph Department and the assessee and the provision of lights, fans etc. by the assessee, it is clear that the facilities provided by the assessee like partition, electrical fittings, lifts etc. are part of the building and they are not such items for which separate rent could be charged. The assessee ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g partition of the said halt to suit his convenience, then the lessor cannot claim that he is charging separate rent for the partitions, doors windows, ventilation, bath rooms etc. All these things are part and parcel of the same building and constitutes part of the building income under the head ' House property ' is assessable in respect of the rent receivable therefrom and house property does not mean only the wall, bricks, cement and it also includes doors, windows, fans and electrical fittings and such other amenities which are necessary for the proper enjoyment of the property. No separate rent can be attributable to the provision of amenities such as electrical fans, lights, water closet, manhole, soap tray, shower rose, tower rail, geyser etc. etc. because all these amenities are necessary for the enjoyment of the property. In a building consisting of five floors, lift is absolutely necessary as otherwise no tenant would take the building on rent. Therefore all the above amenities are part and parcel of the building which are necessary for the enjoyment of the building by tenants as otherwise, no tenant would occupy the building on lease. No doubt these facilities increase ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ixtures had to be assessed under section 12 of the Indian Income-tax Act, 1922 after providing for the allowances mentioned in sub-section (3) of that section. The assessee and the lessee intended that the building and the fixtures and furniture were to be used for one purpose namely, for the purpose of running a hotel all together, and not one separately from the other, notwithstanding that the sums payable for their enjoyment were fixed separately. In that case building, plant and machinery and furnitures were inseparably let out. But in the assessee's case before us there is no letting out of the plant, machinery or furniture and whatever amenities were provided by the assessee are necessary for the enjoyment of the building and hence the decision of the Madras High Court in the case of Indian Metal & Metallurgical Corpn., reproduced above applies. 9. In the case of Model Mfg. Co. (P.) Ltd., the Calcutta High Court held that the services rendered by the assessee in providing electricity, use of lifts, supply of water, maintenance of staircase and watch and ward facilities to tenants were not incidental to letting out property and service charges were assessable as income from o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hinery, plant and furniture, and also a letting of the building. The question arose whether, the two letting form part and parcel of the same transaction or the two lettings are inseparable so that the rent may be assessed as ' income from other sources ' and the Kerala High Court held that there was no letting of the machinery, plant or furniture but only a letting of a building with certain amenities and section 56(2)(iii) of the Income-tax Act, 1961 was not applicable and the income from the letting out was chargeable as ' income from house property ' and not as ' income from other sources '. Similarly, in the case of the assessee before us, there was not letting out of any amenities provided but only letting out of the building as whole. No rent is charged or chargeable by the assessee on account of use of lifts provided in the building, etc. Other amenities like lights, fans WCs., etc. are necessary for the enjoyment of the property and therefore, they form part of the building. Since there is no separate letting out of the lights, fans, doors, etc. and there cannot be separate letting out of such items, the income from letting out of the building by the assessee as envisaged ....