TMI Blog1997 (2) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... and non-recurring nature were income assessable under the head 'Other sources' ? 4. Whether the Tribunal was right in holding that there could be an assessment on any amount higher than the bona fide annual letting value of the house property for the assessment year 1975-76 for the reason that there were receipts from the land appurtenant to the building ?" Of the abovesaid four questions, learned counsel for the assessee has represented that he is not pressing for our opinion on the first two questions. Hence, we return the said two questions to the Tribunal unanswered. With reference to the other two questions, we feel that they could be dealt with together in the light of the only argument advanced by learned counsel for the assessee, though the assessee was taking up different contentions before the Tribunal below. Before actually setting out the said only argument, a few relevant facts may be stated thus : The assessee has a well in the compound of her dwelling house at Madras, with a perennial spring which provides a copious supply of water. During the drought of 1974, she has allowed Spencer and Co. and Hotel Taj Coromandel to draw water from that well and has received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as advanced in view of the fact that for the assessment year 1975-76 (though not for later assessment years), in computing the income under the head "Income from house property" the annual letting value of the house property which includes the appurtenant land also, alone could be charged to tax and that having been already charged to tax, nothing further could be included in it, either by way of the abovesaid proceeds realised from the supply of water or otherwise. The Appellate Assistant Commissioner negatived the said contention on the ground that the abovesaid proceeds realised from the well water were not by letting out the well, but it was income from the sale of the appellant's produce from the well, computed with reference to the quantity of water drawn therefrom. Before the Tribunal also, among other arguments, the above referred to argument in relation to section 22 of the Act was advanced. The Tribunal also negatived the said argument, observing thus : "...there was no question of the lease of the well. The assessee was deriving income by giving away the water from the well just as the assessee might derive income by selling the fruits on the trees in a property with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee cannot be accepted for the following reasons : Though the portion of the vacant land in which the well is situate could have been earlier appurtenant land to the adjoining dwelling house, which was put up subsequent to the above referred to earlier assessment year 1970-71 (when the entire vacant land was without any superstructure therein) it (the abovesaid portion) ceased to be an appurtenant land to the said dwelling house and became primarily a source of an independent income got from the water from the abovesaid well therein, despite the fact that the well water might have been utilised by the assessee for her domestic purposes. The transformation of the character of the said portion could be implied from the following factual findings in the order of the Appellate Assistant Commissioner: "As far as 1975-76 is concerned, the source of income has become an established and permanent one, a valuable asset of the appellant. The well has become a perennial source of a produce, viz., water, which is capable of being sold for cash in years of drought which occurs periodically in the city of Madras. And the appellant has shrewdly exploited this source, employing power and machiner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the chabutras as such. A hundred acres may spread out in front of a club house for various games like golf. But all these abundant acres are unnecessary for nor incidental to the enjoyment of the house in any reasonable manner... Therefore, what is necessary for the enjoyment of the building is alone covered by the expression 'appurtenance'. If some other purpose was being fulfilled by the building and the lands, it is not possible to contend that those lands are covered by the expression 'appurtenances'... In short, the touchstone of 'appurtenance' is dependence of the building on what appertains to it for its use as a building. Obviously, the hat, bazar or mela is not an appurtenance to the building. The law thus leads to the clear conclusion that even if the buildings were used and enjoyed in the past with the whole stretch of vacant space for a hat or mela, the land is not appurtenant to the principal subject granted by section 9, viz., buildings." Further in Larsen and Toubro Ltd. v. Trustees of Dharmamurthy Rao Bahadur Calavala Cunnan Chetty's Charities [1988] 4 SCC 260, the relevant observation is as follows: "Whether the land is to be treated as appurtenant or not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he idea of income is absent. The real basis for this conception of non-taxable casual receipt is that the transaction in question which produces it does not constitute any trade or in adventure in the nature of trade." Such an observation has been made in that case because in that year, water was initially supplied as a friendly gesture without seeking to make any gain. That is why in the present first appellate order, it is said in relation to the above referred to earlier assessment year thus: "At one of the rotary meetings... the Secretary of Spencer and Co. Ltd., happened to discuss with the appellant's husband about the serious shortage of water in Connemara Hotel. To tide over the difficulty on account of the water scarcity, the appellant's husband suggested that the Spencer and Co. Ltd., could draw water from the well. The drought continued and the appellant came to know that Spencers were utilising the water drawn from the well in their aerated water factory also. Thereupon the appellant expressed the desire that some payment should be made for the water drawn from the well." While so, coming back to the present assessment year, that is, about five years later, not on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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