TaxTMI 
TaxTMI 
2012 (12) TMI 191
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....Section 143(3), the assessing officer examined the contention of the assessee that the rental income of Rs.1,76,40,000/-, fell to be assessed under the head "income from house property". He perused the rental agreements and found that the rent consisted of three components i.e. (1) rent for building, (2) rent for the furniture, fittings and fixtures and (3) charges for the maintenance of the above. Since the rent was composite, he was of the view that it was assessable under the head "income from other sources" under Section 56 of the Act and consequently the deductions claimed by the assessee under Section 24 were not allowable. The assessee had contended that the rent received was not composite and it was the prevailing practice that commercial buildings were generally let out with additional facilities such as furniture and fixtures, air conditioner, electricity backup, false ceilings, generators, water tanks etc. The AO considered the assessee's claim and held that under the agreements with M/s Proton Links Systems Pvt. Ltd. and M/s In Touch, the premises were let out on condition that the assessee was to provide certain facilities such as reception area with sofas,....
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....part of the decision of the Tribunal. He is, however, aggrieved by the other part of the order whereby the Tribunal held that the rental income from other lessees was held assessable under the head "income from other sources" and not under "income from house property". The Tribunal found that the letting out to these entities consisted of the space, fittings and fixtures, air conditioning plant, ceiling lights, furniture and fixtures etc. The Tribunal eventually held as follows: "5.9 From the table, it will be further seen that leases to Hutchison and Proton Links consist of the space, fittings and fixtures, air-conditioning plant, ceiling lights and furniture and fixtures. In respect of Trinet, it is mentioned that only fixture and fittings have been leased out. The AO on the other hand, mentions about the lease to 'M/s In Touch' and that lease terms are similar to the lease terms in case of Proton Links. From the lease deed with Trinet filed before us PB page nos. 59-62), it is seen that the said premises were leased w.e.f. 9.1.2006 along with fixtures & fittings as per annexure 'A'. This annexure was not filed either before the AO or enclosed in the paper book. Therefor....
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....d not modify or alter its earlier order passed in the appeal in any manner. Thus, no relief was obtained by the assessee from the Tribunal. 5. The contention urged on behalf of the assessee in support of the appeal is that the fittings and fixtures and other installations in the let out premises were installed only at the desire of the lessee and in such circumstances, the income should properly be assessed under the head "income from house property" as mandated by Section 22 of the Act. The relevant portions of the lease documents were read out to us to drive home the point. We do not think that anything turns on the fact as to at whose instance the machinery, plant or furniture were installed in the leased premises. The real test which has been applied by the Tribunal, and rightly so is to see whether the letting is a composite or inseparable letting and if it is so, the rent falls for being assessed under the residual head of income and not under the head "property". The order of the Tribunal and the finding that the letting out of the plant, machinery or furniture and the premises constituted a single, composite and inseparable letting is based on the tests laid down by the ....
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....ilding out of section 9 and putting it under section 12 as a residuary head of income. It then becomes a new kind of income, not covered by section 9, that is, income not from the ownership of the building alone but an income which though arising from a building would not have arisen if the plant, machinery and furniture had not also been let along with it." 6. It is only by applying the aforesaid tests to the facts of the present case that the Tribunal held that the letting in the present case was a composite one. In so concluding the Tribunal contrasted the terms under which the ground and first floors of the building were leased to Haldirams. What was let out to Haldirams was the bare space with only a right given to the lessee to use the common facilities such as lift, lobby, staircases, corridors etc. in order that the property can be enjoyed effectively; there was no letting out of machinery, plant or furniture to Haldirams. However, in the disputed cases there was a letting of the fixtures, fittings, air-conditioning plant, furniture etc. together with the building and both were inseparable. This is what the Tribunal has found. It further found that the intention of th....