TMI Blog1993 (8) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... concluding that the income from the building the construction whereof had been found to be the basic adjunct of the assessee's business would not be assessable as business income ? 2. Whether, on the facts and in the circumstances of the case, the assessee's claim for depreciation of Rs. 12,500 on the building was properly rejected by the Tribunal ?" This reference raises interesting questions of law concerning the interpretation and application of section 22 of the Income-tax Act, 1961. The relevant facts having a bearing on the subject-matter of this reference are briefly summarised hereinafter. The assessee acquired a plot of land at Mahim, Bombay, on lease for 98 years on rent of Rs. 8,400 per month. It was stipulated as one of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the land. The assessing authorities have treated the rental income of the assessee from the said residential buildings as income from house property. Factually speaking, the assessee is not in occupation of the said residential buildings for its cinema business or otherwise. The question which arises for consideration of this court in substance is as to whether the assessing authorities were justified in treating the rental income received by the assessee from the tenants of the residential building as income from house property. The assessee contended before the authorities below that the abovereferred income of the assessee from the abovereferred residential building should be assessed as business income and not as income from house ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id cinema theatre. Learned counsel submitted that having regard to the peculiar facts and circumstances, it should be held that the occupation of the abovereferred residential building by the tenants amounts in law to occupation of the said building by the assessee itself for the purposes of its own business. Learned counsel has submitted that if the said residential building would not have been constructed, it would not have been possible for the assessee to construct the cinema theatre. Learned counsel has submitted that there is a nexus between the business of the assessee and the rental income received by the assessee from the tenants of the residential building. Having regard to the facts of this case and the plain language of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinct head cannot be brought to charge under a different head. In the reference before us, rental income from residential property used and occupied by tenants squarely falls under the head of "Income from house property". The said income cannot be, therefore, classified under the head of "Profits and gains of business". It is irrelevant that the assessee is a business company and the assessee would not have constructed separate residential buildings on the said plot to house its tenants but for the purpose of facilitating construction of a cinema theatre. Learned counsel for the assessee relied upon the judgment of the Karnataka High Court in the case of Addl. CIT v. Hindustan Machine Tools Ltd. [1980] 121 ITR 798. In this case, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. v. CIT [1983] 140 ITR 132. In this case the assessee-bank had shifted its operation from Lahore to India on partition. In this situation, the assessee-bank was required to provide residential accommodation to its employees. Ranganathan J. (as his Lordship then was) speaking for the Bench observed that having regard to the facts of the case, it must be held that the residential property was acquired by the bank for carrying on the business of the bank more efficiently and fruitfully. The said case has no bearing on the reference under consideration. The case where residential premises are provided to the employees of a business concern stands on a different footing. Learned counsel for the assessee relied on the ratio of the judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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