TMI Blog2011 (2) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... vind and M.V. Seshachala for the Appellant. A. Shankar and M. Lava for the Respondent. JUDGMENT N. Kumar, J. These 12 appeals are preferred by the assessees against the order passed by the Tribunal holding that the rental received by the assessees from letting out work stations, air conditioners, electrical fittings, fire detectors etc., are to be bifurcated under the heading of 'Income from other sources' and not 'Income from house property.' 2. The substantial question of law that arises for consideration in all these appeals is as under: "(1) Whether the Tribunal was justified in holding that the rental income received by the assessees from letting out the building together with furniture, fixtures and equipments should be bifurcated under two heads: (a) "income from house property" (b) "income from other 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d themselves in disallowing the depreciation and interest on the income of hiring charges rendered by the assessees as "income from other sources". Aggrieved by this portion of the order of the Tribunal the revenue has preferred these appeals. 5. The learned counsel appearing for the revenue assailing the impugned order contends that the material on record discloses that the assessees have let out the premises along with furniture and fixtures to the lessees under a common lease deed. Without those furniture and fixtures, the shell portion of the building is of no use to the lessees. Thus the furniture and fittings could not have been let out independently to any other person. Under those circumstances as held by the Calcutta in the case of CIT v. Shambhu Investments (P.) Ltd. [2001] 249 ITR 47/116 Taxman 795 which has been affirmed by 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to income-tax, shall he chargeable under the head "Income from house property," Therefore it is clear that it is the annual value of property consisting of : (a) any buildings or (b) amounts derived thereof (c) of which the assessee is the owner only could be the income chargeable to Income-tax under the heading income from house property. 10. Section 23 of the Act provides for determination of annual value. Section 24 deals with deductions from income from house property. Section 25 deals with amounts not deductible from income from house property. Section 26 deals with property owned by co-owners which provides that: "Where the property consisting of buildings or buildings or lands appurtenant thereto is owned by two or more persons and their respective shares are definite and 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rived from the said property was actually rent received from the occupiers end not to be regarded as service charges and maintenance and cannot be termed as business income. The Tribunal set aside the order of the Commissioner and restored the order of the Assessing Officer. In appeal, the High Court after referring to the various judgments held that, merely because income is attached to any immovable property that cannot be the sole factor for assessment of such income as income from property. What has to be seen is what was the primary object of the assessee while exploiting the property. If it is found applying such test that the main intention is for letting out the property or any portion thereof the same must be considered as rental income or income from property. In case it is found that 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 le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for consideration in the said case was, whether the rental income is to be assessed as a business-income or income from other sources. 15. Answering the said question, they held the rent from the building will be computed separately from the income from the furniture and fixtures and in the case of rent from the building the appellant will be entitled to the allowances mentioned in sub-section (4) of section 12 and in the case of income from the furniture and fixtures, to those mentioned in sub-section (3), and that no part of the income can be assessed under section 9 or under section 10. Therefore, in substance it was held the income falls under the heading of income from other sources and not income from business. Therefore, the Supreme Court did not go into the question whether income 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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