TaxTMI 
TaxTMI 
2014 (8) TMI 691
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....ers No. 2, Block No. III at Nariman Point, Mumbai along with four open garages, for compensation of Rs. 1,31,800/- per month for office premises and for garages and Rs. 8,000/- as hire charges for furniture, fixtures and fittings (Total Rs. 1,39,800/-). The assessee claimed that the office premises were fully furnished/equipped and the income should be taxed as income from business, as has been done in the earlier assessment years. The Assessing Officer held that rent, which the assessee had received was required to be assessed as income from the property. The Assessing Officer also rejected the assessee's claim of set off of depreciation on the ground that depreciation was not admissible in respect of the income from the property. 5. The Assessee, being aggrieved by the above order of Assessing Officer, thereafter, approached the Commissioner of Income Tax (Appeals). In the appeal, it was held by CIT(A) that the property in question was let out along with furniture, but the compensation for the office premises and garages was independent of hire charges of furniture, fixtures and fittings. The CIT(A), therefore, held that the compensation for office premises and garage is t....
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.... of Income Tax Vs. P. Andal Ammal" reported in (2001) 117 Taxman 747 (Madras). 8. Ms. A. Dessai, learned Counsel for the Revenue supported the impugned order and opposed the appeals vehemently. She submitted that furniture and office premises could have been let separately. She also submitted that if the provisions of Section 22 of the Act are applicable to the case of assessee, then, there is no question of application of provisions of Section 56 of the Act. She also heavily relied upon the decision in "Sultan Brothers (P) Ltd." (supra), the decision of Calcutta High Court in "CIT Vs. Shambu Investment (P) Ltd" reported in (2001)249 ITR 47 (Cal) and the decision of the Apex Court in "Shambu Investment (P) Ltd. Vs. CIT." reported in (2003)263 ITR 143 (SC). 9. Having considered the rival submissions and having gone through the impugned order along with the relevant documents and ratio of the decisions of the judgments cited at bar, we find merit in the appeals. 10. Section 14 of the Act which falls in chapter IV regarding computation of total income deals with the heads of income. Under this Section, for the purpose of charge of income tax and computation of total income, a....
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....er of a building fitted with furniture and fixtures for being run as a Hotel. By the lease dated 30/08/1949, the appellant let out the building fully equipped and furnished to Voyantzis for a term of six years from 1946 for running a Hotel and for certain other ancillary purposes. The agreed monthly rent was Rs. 5,950/- for the building and Rs. 5,000/- for hire of furniture and fixtures. The question which fell for consideration before the Supreme Court was how the income received as a rent on hire is to be assessed i.e. under which section of Income Tax Act, 1922 is it assessable. The appellant in that case also contended that the entire income should be assessed under Section 10 as an income from business or in the alternative income should be assessed under Section 12 as income from residuary sources i.e. income from other sources. The Constitution Bench of Apex Court held that income under the lease cannot be assessed under Section 10 of the Income Tax Act, 1922 as the income from the business. Regarding the question whether income can be assessed under Section 12 as an income from residuary sources or income from other sources, the observations of the Apex Court in paragraphs ....
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....nd the two indeed are always separable. We are unable, therefore, to accept the contention that inseparable in the sub-section means that the plant, machinery or furniture are affixed to a building. 16. It seems to us that the inseparability referred to in sub-section (4) is an inseparability arising from the intention of the parties. That intention may be ascertained by framing the following questions: Was it the intention in making the lease and it matters not whether there is one lease or two, that is, separate leases in respect of the furniture and the building that the two should be enjoyed together? Was it the intention to make the letting of the two practically one letting? Would one have been let alone and a lease of it accepted without the other? If the answers to the first two questions are in the affirmative, and the last in the negative then, in our view, it has to be held that it was intended that the lettings would be inseparable. This view also provides a justification for taking the case of the income from the lease of a building 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 se....