TMI Blog1992 (10) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the landlord such as providing two lifts on all days and keeping them in proper working condition ; the lessor also shall keep the foyers, stair and landings leading to the premises clean and properly lit ; the lifts shall be operated by the landlord at its own cost and the lessor shall employ attenders for the operation of the lifts ; the lessor to keep outside and inside of the premises including foyers, stairs, etc., in condition. There are usual clauses such as a clause pertaining to the provision regarding the supply of water, repairing of water taps, burst sanitary pipes and leakage in electricity, etc. Clause 5 of the lease deed provided for the consideration calling it as rent for the premises including the services rendered at Rs. 52,501.05 per month. Clause 35 of the lease deed specifically stated that 15 per cent. of the aforesaid rent agreed upon is to be paid towards the services to be provided by the landlord to the tenant in terms of the agreement and that the rent shall be inclusive and deemed always to be inclusive of such service charges. The assessee which is the landlord contended that the 15 per cent. of the so called rent is attributable to service charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use property " under section 22. Learned counsel contended that it is impermissible in the instant case to split up the consideration payable by the tenant to the "Landlord-assessee, one representing "income from house property " and the other representing the income attributable to the amenities or services. Learned counsel relied on a decision of the Kerala High Court in Dr. P.A. Varghese v. CIT [1971] 80 ITR 180. The question referred in the said case itself indicates the distinguishing feature involved. The question was whether the income from letting of the building by the assessee to the Export Promotion Council was assessable under the head " Income from house property ". It was contended by the assessee there that the income should be treated as " income from other sources " under section 56(2) of the Act. The lease deed required the landlord to provide the necessary lavatories, closets, etc., as indicated in the drawing attached to the lease deed. The landlord also had to provide air-conditioning in respect of one room. There had to be three garages. There were other clauses pertaining to fluorescent tubes, separate electric meters, arrangement for water supply, etc., incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as in the instant case before us. But the assessee had not claimed a separate treatment regarding the alleged income from the air-conditioning plant in the said case and had such claim been made, we do not know what view the Bombay High Court would have taken. In fact, the Bombay High Court referred to and accepted the decision of this court in D. C. Shah. CIT [1979] 118 ITR 419. In the aforesaid decision of this court in D. C. Shah's case [1979] 118 ITR 419, the air-conditioning plant was to be maintained by the lessor and the lessee paid for the said provision of air-conditioning facility on the basis of the floor area. The air-conditioning plant was also under the control of the landlord-assessee ; the service charges were sought to be treated by the assessee as falling under section 56(2)(iii), as happened in the above Bombay case. This court held that there was no leasing of the air-conditioning plant because no transfer of interest therein was effected under the lease. This court at page 431 quoted certain observations of the House of Lords in Salisbury House Estate Ltd. v. Fry [1930] 15 TC 266, which reads thus: "It is necessary, however, to make it quite clear that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme Court had an occasion to consider the question which has a bearing on the present question before us. It was pointed out that the services rendered by the assessee to its tenants were the result of its activities carried on continuously in an organised manner, with the set purpose and with a view to earn profits and those activities were business activities and, therefore, the income arising therefrom was assessable under section 10 of the old Indian Income-tax Act, 1922 (which is similar to section 28 of the present Act). The Supreme Court had in fact referred to the decision of the House of Lords in Salisbury House Estate Ltd.'s case [1930] 15 TC 266, observations from which we have already quoted above. The decision in Karnani Properties Ltd.'s case [1971] 82 ITR 547 (SC) highlights the principle that all income derived by the owner of the premises irrespective of the capacity in which the income is derived cannot be treated as income from the said property. The capacity in which the income is derived will have to be looked into. There are three decisions of the Calcutta High Court wherein a similar view has been upheld. In CIT v. Kanak Investments (Pvt.) Ltd. [1974] 95 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 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, it 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 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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