TaxTMI 
TaxTMI 
2011 (2) TMI 497
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.... sources" Insofar as the income from furniture, fixtures and equipments is concerned not the entire rental income under the heading of 'income from house property' the income is to be assessed as income from house property. 3. The assessees in all these appeals are co-owners of the property situated at 13, 14, 15, & 16 Magrath Road, Bangalore, The said property was given on joint development to M/s. Embassy Classic Private Limited. After the transfer of the portion of the interest in the property in favour of the developer or its nominees in terms of the joint development agreement, the assessees had reported long-term capital gains. The assessees had filed returns under section 143(1) of the Income-tax Act, 1961, (hereinafter referred to as 'the Act' for short). The proceedings under section 132 of the Act was initiated by the Department in the premises of the assessees on 9-4-2005. No income or assets let alone undisclosed or the concealed income was found. After the completion of the search operations notices were issued under sections 153A and 139(1) of the Act for the assessment years 2000-01 to 2005-06 calling upon the assessees to file returns of the income for the sai....
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....y the Apex Court that when the main intention is to exploit an immovable property by way of complex commercial activities, the income derived representing the hire charges of furniture and fixtures forms part of the income from house property. Therefore, the Tribunal was not justified in taking a contrary stand. As such they seek for setting aside the said order. 6. The learned counsel appearing for the assessees supported the impugned order contending that there is only one lease deed and a separate rent is specified for the shell, that is the building and for the furniture and fittings which are given on hire to the tenant. In fact a loan was borrowed from ICICI bank for providing these fittings and furniture, according to the specification of the tenant and the said lease is independent of the lease of the building, though in the very same lease deed both are specifically mentioned giving separate schedules. Therefore he submits that by no stretch of imagination the rental income derived from letting out furniture and fixtures would constitute income from house property and the hire charges received in this regard would not constitute income from house property. He also conte....
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....nd ascertainable, such persons shall not in respect of such property be assessed as an association of persons, but the share of each person in the income from the house property as computed in accordance with sections 22 to 25, shall he included in his total income" Then section 27 deals vote owner of house property. 11. It is in this background we have to see the statutory provision contained in section 56 which deals with income from other sources. Sub-section (1) of section 56 makes it dear that income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head "Income from other sources"; if it is not chargeable to income-tax under any of the heads specified in section 14, Items A to E, sub-section (2) of section 56 specifically states the rate of income-tax which shall be chargeable to income-tax under the head 'income from other sources'. Sub-clause (ii ) provides that "income from machinery, plant or furniture belonging to the assessee and let on hire, if the income is not chargeable to Income-tax under the head 'Profits and gains of business or profession'. Clause (iii) also provides that "where an as....
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....t the main intention is to exploit the immovable property by way of complex commercial activities in that event it must be held as business income. 13. Applying the said law to the facts of the case it was held that, the cost of the property was Rs. 5,42,443. A portion of the said property is used by the assessee himself for his own business purpose. The rest of the said property has been let out to the various occupiers, the assessee had already recovered a sum of Rs. 4,25,000 as and by way of security free advance from three occupants. Hence, the entire cost of the property let out to those occupiers has already been recovered. Therefore it was held, it cannot be said that the assessee is exploiting the property for its commercial business activities and such business activities are prime motive and letting out the property is a secondary one, Applying the test set down in Sultan Bros. (P.) Ltd. v. CIT [1964] 51 ITR 353 by the Apex Court it was held that, it is composite table space let out to various occupants, the amenities granted to those occupants including the user of the furniture and fixtures are attached to such letting out and by the said agreement, the parties have ....
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....e from the furniture and fixtures would fall under the income from house property at all. As such, the said judgment has no application to the facts of this case. 16. In this case the question for consideration is whether the income from furniture and fixtures is to be put under the head 'income from house property'. As both the leases are contained in very same document the said Judgments are of very little assistance in deciding the case on hand. However, the Madras High Court in the case of Tarapore & Co. v. CIT [2003] 259 ITR 389/[2002] 125 Taxman 446 dealing with an identical issue held as under:- "That the actual rent received by the owner (assessee) would constitute the basis for determining the annual value and it was the value which would have to form the basis for determining the income from house property and for allowing the deduction from income from house property to the extent permitted under the other provisions of the Income-tax Act. In making such computation, there was no provision to add other amounts received by the owner of the building as representing the value of the service charges rendered by him to his tenants as income from house property. He....