TMI Blog2012 (12) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... nt PVT Ltd. [2001 (3) TMI 77 - CALCUTTA HIGH COURT] or the judgment of the Supreme Court [2003 (1) TMI 99 - SUPREME COURT] which confirmed the judgment of the Calcutta High Court are authorities for the proposition that is being canvassed before us on behalf of the assessee. Here, the question that arises for decision is whether the letting was inseparable and therefore Section 56(2)(iii) was rightly invoked by the assessing officer. That question did not fall for decision either before the Calcutta High Court or before the Supreme Court in the judgments cited above. Income to be taxed under the head Income from other sources - substantial question of law has to be answered in the affirmative and against the assessee. - ITA 319/2012 - - - Dated:- 22-11-2012 - MR. S. RAVINDRA BHAT MR. R.V. EASWAR JJ. Appellant: Mr. Rajiv Saxena with Mr. Rajat Joseph, Advs. Respondent: Mr. Sanjeev Sabharwal, sr. standing counsel with Mr. Puneet Gupta, jr. standing counsel R.V. EASWAR, J: (OPEN COURT) CM 8651/2012 In view of the averments made in the application the delay in filing the appeal is condoned. Application is disposed of. ITA 319/2012 On 30.08.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Sultan Brothers Pvt. Ltd. Vs. CIT, (1964) 51 ITR 353 and several other decisions cited in the assessment order. In this view of the matter, he brought the rental income of Rs.1,76,40,000 to tax under the head income from other sources with the result that the deductions under Section 24 claimed by the assessee on the footing that the rental income was assessable under the head income from house property stood disallowed. The net result was an addition of Rs.52,92,000/-. 3. The assessee filed an appeal to the CIT(Appeals) and reiterated the stand taken by him before the assessing officer. The CIT(Appeals) affirmed the order of the assessing officer and dismissed the assessee s appeal. The assessee appealed further to the Tribunal in ITA No.4652/Del/2010. The Tribunal examined the issue in great detail in the light of the various authorities cited by the assessee. In respect of the rent received from Haldirams, the Tribunal took the view that the assessee simply let out the ground and first floors in the building and the lessee was given a right to use the common facilities such as staircases, corridors and lifts which are normally permitted to be used by any lessee for enjoy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f leasing building separately and other assets separately. Accordingly, it is held that the intention was to let the building, plant, fittings and furniture etc. together. The second question is-whether the intention is to make letting of tow practically one letting? It is seen that a consolidated lease deed has been drawn in which a consolidated lease rent has been fixed. Therefore, there is a consolidated lease of various assets. It is also a matter of fact on record, accepted by the ld. counsel, that one would not have been let without the other as fittings etc. were made in accordance with desires of the lessees. Therefore, we are of the view that the facts of the case are square covered by this decision of the Constitution Bench. Accordingly, the lease rent has to be assessed under the residuary head. It may be mentioned here that the assessee has claimed depreciation in respect of all assets which are subject matter of lease with these three parties. This conduct also shows that the assessee wanted to use the assets as business assets. The claim of the assessee was thus rejected by the Tribunal. 4. The assessee filed an application (MA 238/Del/2011) contending that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section might well have provided that where machinery, plant or furniture are inseparable from a building and both are let, etc. The language however is not that the two must be inseparably connected when let but that the letting of one is to be inseparable from the letting of the other. The next objection is that there can be no case in which one cannot be separated from the other. In every case that we can conceive of, it may be possible to dismantle the machinery or plant or fixtures from where it was implanted or fixed and set it up in a new building. As regards furniture, of course, they simply rest on the floor of the building in which it lies and 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court. It seems to us that the Calcutta High Court was persuaded to hold, on the facts of that case, that the rental income was not assessable as property income on the basis that the primary object of the assessee was to exploit the immoveable property by way of complex commercial activities and therefore, the rental income should be assessed as business income. The controversy in the case before the Calcutta High Court was whether the rental income can be treated as property income or as business income. The provisions of Section 56(2)(iii) were not required to be considered. The controversy before us is different namely, whether the rental income is to be assessed as property income or income from other sources . Therefore, it cannot be said that the judgment of the Calcutta High Court or the judgment of the Supreme Court which confirmed the judgment of the Calcutta High Court are authorities for the proposition that is being canvassed before us on behalf of the assessee. Here, the question that arises for decision is whether the letting was inseparable and therefore Section 56(2)(iii) was rightly invoked by the assessing officer. That question did not fall for decis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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