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TMI Blog1992 (8) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and in the circumstances of the case, the Appellate Tribunal was right in law, in holding that the loan agreement in question provided for the repayment of the moneys during a period of not less than seven years ? " For the assessment year 1971-72 : " 3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the payments made by the assessee to its employees each drawing more than Rs. 7,500 as annual salary in excess of 20 per cent. of such salary did not amount to benefit, amenity or perquisite within the meaning of section 40(a)(v) of the Incometax Act, 1961 ? " and, at the instance of the assessee, the following questions are referred for our opinion: For the assessment year 1971-72: " 4. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the expenditure incurred on payment of listing fees as regards the assessee's shares had not been laid out wholly and exclusively for the, purposes of the assessee's business ? 5. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the rent i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant Commissioner who, by a consolidated order dated July 21, 1975, held that the aforesaid excessive payment of bonus did not amount to any benefit, amenity or perquisite within the meaning of section 40(c)(iii) or section 40(a)(v) of the Act. The Appellate Assistant Commissioner, accordingly, allowed the appeal of the assessee on this count mainly relying upon the order of the Income-tax Appellate Tribunal in Income-tax Application No. 1628 (Ahd.) of 1970-71 rendered in the case of the present assessee for the assessment year 1967-68 holding that the bonus was part of remuneration and cannot be treated as perquisite. The said decision of the Tribunal in the case of the present assessee for the previous assessment year was accepted by the Department, and, therefore, the Appellate Assistant Commissioner was of the view that the Income-tax Officer was not justified in making the additions of the aforesaid amounts and that the said amounts already included were required to be deleted from the income of the assessee. (iv) Being aggrieved by the said order passed by the Appellate Assistant Commissioner, the Revenue preferred a second appeal to the Income-tax Appellate Tribunal and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant Commissioner and, in further appeal to the Tribunal, the Tribunal has confirmed the order of the Appellate Assistant Commissioner. This has given rise to the reference of questions Nos. 5 and 6 to this court at the instance of the assessee. Answer to questions Nos. 1 and 3: The first question relates to the assessment year 1968-69 for which the relevant provisions are section 40(c)(iii) of the Income-tax Act, 1961, and the third question relates to the assessment years 1969-70 to 1971-72 for which the relevant provisions are section 40(a)(v) of the Income-tax Act, 1961. Excepting that the questions are to be answered by reference to different provisions as it stood at the relevant time, the question to be answered is a common question with regard to bonus paid to the employees of the assessee-company drawing salary of more than Rs. 7,500 per year. The Income-tax Officer has taken the view that the said bonus which was paid in excess of 20 per cent. of salary to each of the employees drawing salary of more than Rs. 7,500 per year could not be considered to be part of remuneration or salary and that the said bonus which was in excess of 20 per cent. of salary became part of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstantial interest in the company or to a relative of the director or of such person, as the case may be . . . (iii) any expenditure which results directly or indirectly in provision of any remuneration or benefit or amenity to an employee Who is a citizen of India, to the extent such expenditure exceeds the amount calculated at the rate of five thousand rupees per month for any period of his employment after the 28th day of February, 1963 . . . " Section 40(c)(iii) was amended by the Finance Act of 1964, whereafter it read as follows : " (iii) any expenditure incurred after the 29th day of February, 1964, which results directly or indirectly in the provision of any benefit or amenity or perquisite, whether convertible into money or not, to an employee (including any sum paid by the company in respect of any obligation which but for such payment would have been payable by such employee), to the extent such expenditure exceeds one-fifth of the amount of salary payable to the employee for any period of his employment after the aforesaid date : Provided that in computing the aforesaid expenditure any payment by way of gratuity or the value of any travel concession or assistance re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of tax referred to in sub-clause (vii) of clause (6) of that section or any sum referred to in clause (vii) of sub-section (1) of section 17 or in clause (v) of sub-section (2) of that section or the amount of any compensation referred to in clause (i) or any payment referred to in clause (ii) of sub-section (3) of that section or any payment referred to in clause (iv) or clause (v) or any expenditure referred to in clause (ix) of sub-section (1) of section 36 shall not be taken into account: Provided further that nothing in this sub-clause shall apply to any expenditure which results directly or indirectly in the provision of any benefit or amenity or perquisite to an employee whose income chargeable under the head 'Salaries' is seven thousand five hundred rupees or less. " It may be noted that, in the amendment which was effected by the amendment of Finance Act, 1964, the word " remuneration ' was dropped from the relevant phrase giving an indication that the Legislature did not intend to include cash emoluments in any of the words " benefit, amenity or perquisite". Secondly, by the said amendment of 1964, the Legislature also added the words " whether convertible into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said expressions and yet chose to delete the expression 'remuneration' from the said clause (iii). The phrase 'whether convertible into money or not' in our opinion does not govern only the expression 'perquisite'. The words in the section are 'any benefit or amenity or perquisite'. If the phrase 'whether convertible into money or not' was intended to govern only the word 'perquisite' then the correct grammatical form would have been 'any benefit or amenity or any perquisite, whether convertible into money or not'. Similarly, in the case of CIT v. Mysore Commercial Union Ltd. [1980] 126 ITR 340, the Division Bench of the Karnataka High Court was called upon to decide an identical question under section 40(a)(v) in connection with the payment of bonus in cash to the employees. The Division Bench of the Karnataka High Court observed as under (at page 343 ) : " In our opinion, for a proper interpretation of the provision in section 40(a)(v), weight has to be given to the expression 'whether convertible into money or not' which implies that the benefit or amenity or perquisite spoken of in the section is something apart from money such as something in kind, which may be converti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e into money or not would not arise. The court, therefore, found that this was another pointer that the Legislature has no intention to include cash or money paid directly to the employees in the said sub-clause. The court also found that there was a further indication of the intention of the Legislature and that was the fact that in sub-clause (i) of clause (c) of section 40, the word " remuneration " was retained along with the other words " benefit, amenity or perquisite " even after the aforesaid amendment of sub-clause (iii). It is also further shown that the Legislature was conscious of the distinction between the relevant words and, keeping in mind the said distinction, the Legislature had deliberately chosen to delete the expression " remuneration " from sub-clause (iii). Based on all those factors, the Division Bench held that the expression " any benefit, amenity or perquisite " or " whether convertible into money or not " used in sub-clause (iii) was not intended to include cash or money paid directly to the employee. It may be stated that a similar view is also taken by the Andhra Pradesh High Court in the case of CIT v. Vazir Sultan Tobacco Co. Ltd. [1988] 169 ITR 324 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 28(iv). The Tribunal doubted whether the amount of Rs. 15,964 was any benefit. 'It may or may not be a benefit'. Another question is whether the phrase 'whether convertible into money or not' would normally mean something else than money. In our opinion, the conclusion of the Tribunal that section 28(iv) would not apply when the amount received is cash or is considered in terms of money, is correct, and the provisions of section 28(iv) can never be made applicable to the facts of the present case, where excise refund was received by the assessee. It thus becomes clear that the preponderance of judicial view of the courts in India is in favour of the proposition that use of the words " whether convertible into money or not " confine or restrict the application of section 40(c)(iii) or section 40(a)(v) to cases of distribution or payments in kind and not in cash. The provision dealing with the amounts deductible in computing the income from business implies that the benefit amenity or perquisite spoken of in the section is something apart from money such as something in kind which may be convertible into money or not. The expression " whether convertible into money or not " would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to salary evidently indicating that these together will exhaust what an employee obtains in return for his service. Evidently the object of section 40(a)(v) is to persuade the employer to set a limit on the extent of the benefits of any kind that could be extended to any employee by an employer. Of course any employer is free to provide his employee with the salary agreed upon and also allowances, perquisites and such amenities as the parties may choose to stipulate by way of terms of employment. Though these will be expenses falling within section 37(1) of the Income-tax Act as expenditure incurred wholly for the purpose of the business, the employer's claim for deduction is subject to the limit specified in section 40(a)(v). This is so in order that the taxable profits may not be siphoned off. If the benefit, amenity or perquisite exceeds one-fifth of the salary or Rs. 1,000 per mensem, whichever is less such excess over the one-fifth would not be treated as deductible expenditure with the result that despite such payment the assessee will have to pay tax on it. That will effectively deter an assessee from paying anything in excess of one-fifth of the salary by way of benefits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into money or not' need not qualify the whole range. It only means that it is immaterial whether the benefit, perquisite or amenity may or may not be convertible into money. That would be immaterial. According to us, this would be the proper reading of the section. Having given our anxious consideration to the view expressed by the Full Bench of the Kerala High Court, the same does not commend to us firstly because the said decision does not give the proper meaning to the expression " whether convertible into money or not " and tries to explain the use of the said phrase by the Legislature as immaterial. We are of the opinion that, when the Legislature has used the words " whether convertible into money or not " immediately following the words "benefit, amenity or perquisite "I it has purposively used the phrase so as to see that amounts spent towards benefit, amenity or perquisite when the same is offered in kind and not in cash shall not be deducted in computing the income chargeable under the head " Profits and gains of business or profession ".In order to term the payment as a 'perquisite ", it had to be a payment other than cash payment in pursuance of a contract of service. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obligation on the part of the employer (assessee) to make payment of this commission and that the commission was paid ex gratia, the court found that such payment cannot be regarded as unreasonable. The court further observed as under ( at page 366 ) : " Commercial expediency does not mean that an employer should not make any payment to an employee unless the employee is entitled to it under a contract. Even where there is no contract, an employer may pay commission to an employee if he thinks that it would be in the interest of his business to do so. It is obvious that no business can prosper unless the employees engaged in it are satisfied and contented and they feel sense of involvement and identification and this can be best secured by giving them a stake in the business and allowing them to share in the profits. It would indeed be a wise step on the part of an employer to offer incentives to his employees by sharing a part of his profits with them. This would not only be good business but also good ethics. It would be in consonance with the Gandhian concept as also modern socialistic thought which, with its deeply rooted faith in social and economic democracy, regards the emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in further detail and have not decided the correctness or otherwise of the said submission because, on the very first submission, we have agreed with Mr. D.A. Mehta and not agreed with Mr. B.J. Shelat, learned counsel for Revenue, and, therefore, it is not necessary to decide this alternative submission. The second alternative submission of Mr. Mehta, learned counsel for the assessee, was to the effect that, for the assessment years 1969-70 to 1971-72, the bonus paid to the employees even if taken as falling within the first part of section 40(a)(v) would be governed by the proviso which excludes certain expenditure like computing expenditure under the first part of section 40(a)(v). The clause which would apply to bonus would be clause (g) of the proviso. This clause excludes payment referred to in subclause (ii) of clause (3) of section 17. Section 17(1) gives an inclusive definition of word "salary". It, apart from other items included in section 17(1)(iv), includes any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages. The words " profits in lieu of salary has been defined in section 17(3) and section 17(3)(ii) provides for any paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital at Rs. 1,09,65,521 and granted 6 per cent. thereof as capital computation from the relief under section 80J. The Appellate Assistant Commissioner has confirmed the view taken by the Income-tax Officer. At this stage, we may mention that the question whether the loan was repayable within seven years or not under the agreement between the bank and the assessee is concluded by the decision of the Division Bench of this court in the case of this very assessee, i.e., New India Industries Ltd. v. CIT [1977] 108 ITR 181. However, we may also mention that the Division Bench of this court in the aforesaid case was not concerned with rule 19A(3)(b) but it was required to examine the question whether, under the provisions of the Companies (Profits) Surtax Act, 1964, in computing the capital employed for the purpose of surtax under the Act, moneys borrowed by the company from the bank were includible in the total amount of capital in accordance with the rules for computing the capital of company. Rule 1, in so far as it is material, is reproduced herein : " 1. Subject to the other provisions contained in this Schedule, the capital of a company shall be the aggregate of the amounts, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is required to be excluded while computing the capital of the company. Obviously, therefore, the question which would arise for our consideration would be as to whether the terms of the agreement under which the assessee-company took the loan from the bank stipulated the repayment of the loan within a period of not less than seven years. In our opinion, since the question is answered by the Division Bench of this court in the case of this very assessee by construing the very agreement and by reference to the correspondence between the assessee and the bank, the Tribunal was right in following the said decision and in holding that the loan taken by the assessee-company from the bank qualified for inclusion in the computation of its capital for the purposes of section 80J. Mr. D.A. Mehta, appearing for the assessee, has also invited our attention to the decision in the case of Lohia Machines Ltd. v. Union of India [1985] 152 ITR 308 (SC). In our opinion, it is not necessary for us to refer to the said decision in extenso because the question is no longer res integra and is concluded by the decision of a Division Bench of this court in the case of the very assessee-company, and, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion. We are, therefore, of the opinion that, had this circular been brought to the notice of the Tribunal, it would have directed the Income-tax Officer to examine the question afresh and redetermine the same in the light of that circular. Since this circular was not brought to the notice of the Tribunal or to the notice of the lower authorities, we are of the view that we should not answer this question and, accordingly, we decline to answer the question referred to us as was done by the Karnataka High Court in the case of Motor Industries Co. Ltd. v. CIT [1987] 163 ITR 659. Answer to questions Nos. 5 and 6: The aforesaid questions Nos. 5 and 6 referred by the Tribunal for our opinion are already reproduced hereinabove. However, during the course of submissions of learned counsel for both the parties, i.e., for the assessee and the Revenue, we found that question No. 6 is not correctly framed and the same shall have to be reframed as under : " If the answer to question No. 5 is in the affirmative, whether the Tribunal was correct in law in invoking the provisions of section 32(1) read with section 38(2) of the Income-tax Act, while holding that, although the factory buildin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. was taxable under the head " Income from house property ", and that the Appellate Assistant Commissioner was not right in holding that such rental income was income from " Profits and gains of business or profession". In the aforesaid fact-situation, we are required to decide as to whether the Tribunal was right in holding that the rental income accruing to the assessee during the relevant assessment year from renting out part of its business premises can be said to be income under the head " Income from house property " or it can be said to be income from " Profits and gains of business or profession". Chapter IV of the Income-tax Act, 1961, deals with computation of total income. Section 14 prescribes heads of income being: (A) Salaries, (B) Interest on securities, (C) Income from house property, (D) Profits and gains of business or profession, (E) Capital gains, and (F) Income from other sources. In the present case, it shall have to be ascertained as to whether the rental income accruing from renting out part of the business asset can be said to be income from house property or income from "Profits and gains of business or profession". Section 22 deals with "income fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee-company has ceased to work, the assets in question continued to remain business assets, and income arising by leasing out the said business assets would retain the character of business income and it could not have been treated as " income from house property". In other words, in his submission, when there is complete cessation of business and when there is temporary hiring out of business assets by the assessee, like a prudent businessman, with a view to minimise losses, the income from the said hiring out retains the character of "business income". The law on the subject is stated clearly and succinctly by the Supreme Court in the case of CEPT v. Shri Lakshmi Silk Mills Ltd. [1951] 20 ITR 451. The assessee-company before the Supreme Court was a manufacturer of silk cloth and as a part of its business it installed a plant for dyeing silk yarn. During the chargeable accounting period, i.e., January 1, 1943, to December 31, 1943, owing to difficulties in obtaining silk yarn on account of the war it could not make use of this plant and it remained idle for some time. In August, 1943, the plant was let out to a person on a monthly rent. The question was whether the sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f being used for any other purpose and when the assessee ceases to use it as a commercial asset either himself or even through others the income derived by him by renting out the same would more appropriately fall under the head " Income from house property " as, like any other owner of property, he gets income from that property as owner. In such cases, it is not the factum of his business or commercial activity which brings income to him but it is his investment in property or his ownership of property which brings income to him. In such cases, the leasing of property itself is the activity. It is leased with a view to produce income, a transaction quite apart from the ordinary business activities of the company. A clear distinction is made so far as letting out of an asset as land or building is concerned and letting out of plant or machinery. If the plant or machinery or other assets of the assessee-company are lying idle and if they are used or permitted to be used by someone by hiring them out with a view to covering the loss of the assessee, it was held that the income derived from such rental was " rental income ". However, when a building or part of the factory or part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommercial assets. That, they take on an entirely different character. They become capital assets, and qua those assets the assessee is not carrying on any business, but qua those assets the assesses has become their owner. As an owner the assessee may also exploit those assets and receive income. But the income which it receives is no longer business income because no business is being carried on and the assets are not business assets. In such case, the income would be an income derived by the owner from his capital assets, and the head of income under which such income would fall for the purpose of the Income tax Act would be section 12 and not section 10. Whether a business is carried on or not and whether assets of an assessee are business assets or not are questions of fact, and they must be decided by the Tribunal on the evidence led before it. " From the aforesaid observations, one further proposition emerges and it is that, in order that the income of the assessee should be business income, it is not necessary that the income should be produced by the assessee utilising the business asset itself. So long as those assets are used as business assets, it is irrelevant whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts own business. Therefore, with respect to non-factory buildings including godowns, the High Court held that they were commercial assets of the company. The company was utilising the machinery for its own purposes. The income derived from letting out the surplus of the non-factory buildings including godowns was the business income of the assessee. The Division Bench of the Calcutta High Court made the following observations with respect to non-factory buildings and income arising therefrom (at page 255): "In the instant case, as we have earlier noticed, the assessee was carrying on business and in the course of its trading activities the assessee was using and exploiting the non-factory buildings including its godowns. The non-factory buildings including the godowns, therefore, clearly constituted the commercial assets of the assessee ; and as we have earlier noted the effect of the finding of the Tribunal is that the non-factory buildings including the godowns are the commercial assets of the assessee-company. In the course of its trading activities the assessee itself had been using the said commercial assets and exploiting the major portions of the same and the surplus portion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h property as he may occupy for the purposes of any business or profession carried on by him the profits of which are chargeable to income-tax shall be chargeable to income-tax under the head 'income from house property'." The section itself indicates that, merely because a person is the owner of the property, it does not follow that the income therefrom should be assessed under the heading " Income from house property ". It excepts portions of such property as may be occupied for the purposes of any business or profession carried on by him, the profits of which are chargeable to income-tax. It will be essential to find out the user of the property and the character in which that property is used. The distinction was very succinctly brought out by the Supreme Court in the case of Karanpura Development Co. Ltd. v. CIT [1962] 44 ITR 362, at page 377 : " Ownership of property and leasing it out may be done as a part of business, or it may be done as land owner. Whether it is the one or the other must necessarily depend upon the object with which the act is done. It is not that no company can own property and enjoy it as property, whether by itself or by giving the use of it to anoth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t holders. The persons who had taken the vaults were described as licencees and they were liable to pay certain charges. A question that arose before the Supreme Court was as to whether the vaults were used for the purposes of the business and income arising was assessable under section 10 of the old Act equivalent to section 28 of the Act of 1961. The Supreme Court observed at page 601 as under : "The question which really arises in the present case is whether the assessee is carrying on any business, i.e., is it carrying on any adventure or concern in the nature of trade, commerce or manufacture ? If it is carrying on any adventure or concern in the nature of trade, then section 9 ( section 22 of the Act, 1961 ) specifically excludes the income derived from property from computation under section 9, if the property is occupied for the purpose of the adventure or concern. " At page 603, the Supreme Court further observed: " The assessee was thus in occupation of all the premises for the purpose of its own concern, the concern being the hiring out of specially built vaults and providing special services to the licensees. As observed by Viscount Finlay in Governors of the Rotunda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e himself engaging in the manufacture of the components through its own labourers, the ancillary units were required to manufacture them for its purposes. The benefit which the assessee derived was almost direct. The dominant object was to have a ready source of supply of components which the assessee itself might have found it convenient to manufacture and which it preferred the ancillary units to manufacture for it, and the leasing out of the premises in the industrial estate, therefore, was incidental to and for the purposes of the assessee's business of manufacture of various machines and the income from leasing out the premises was part of its income from business. In the case of Punjab National Bank Ltd. v. CIT [1983] 141 ITR 886 (Delhi), the assessee-bank owned a building of six floors, five of which were occupied by the assessee for the purpose of its business and its head office was located there. The sixth floor was let out to a party whose management had some connection with the management of the bank. The whole building was fitted with an air-conditioning plant and there were also lifts operating. The Tribunal allowed full depreciation on the building and the lifts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uilding for his own purposes. It is not different from that of any ordinary letting out of building. An empty building has, no doubt, a commercial value in the sense that it is a place for carrying on business, but it is not a commercial asset in the sense used in the cases we have examined. It becomes clear that the court has noticed that there are two lines of cases and cases which deal with assets which are commercially exploited such as plant or machines or factories stand on a different footing as compared to cases dealing with buildings or lands of the ownership of the assessee. In the case of CIT v. Delhi Cloth and General Mills Co. Ltd. [1966] 59 ITR 152 (Punj), the assessee-company carried on various businesses, owned several buildings most of which were let out to its employees. The rental of the premises was fixed, it did not change with the change of the occupant and it was deducted from the wages of the employee or employees occupying the premises. On the question as to whether such income was assessable under the old section 9 (section 22 of the Act of 1961 ) or old section 10 (section 28 of the Act of 1961 ), the Division Bench of the Punjab High Court (Circuit Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods. The factory premises of the assessee consisted of three portions, the main building, a front shed and a rear shed. In order to curtail the losses, production was reduced with the result that the rear shed became surplus. The rear shed was leased out with a view to reduce the losses. The court found that the facts clearly showed that the shed was leased out temporarily as a commercial asset and hence the income was assessable as business income under section 28. The court applied the following test (at page 304 ) : " 'Thus, in each case, what has to be seen is whether the asset is being exploited commercially by the letting out or whether it is being let out for the purpose of enjoying the rent. The distinction between the two is a narrow one and has to depend on certain facts peculiar to each case'. From the observations made by the Supreme Court and various High Courts in diverse fact-situations, dealing with the question as to under which head of income, the " rental income " would fall, in our opinion, the following principles emerge: (i) No general principle could be laid down Which is applicable to all cases and each case has to be decided on its own facts and circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty, he gets income from that property as owner. In such cases, it is not the factum of his business or commercial activity which brings income to him but it is his investment in property or his ownership of property which brings income to him. In such cases, leasing of property itself is the activity. It is leased with a view to produce income, a transaction quite apart from the ordinary business activities of the assessee. (ix) In deciding whether an assessee dealt with its property as owner or as a businessman or as a prudent man of commerce, one must see not the form which it gave to the transaction but to the substance of the matter. It will be essential to find out the user of the property and the character in which that property is used. Ownership of property and leasing it out may be done as a part of business or it may be done as a landowner. Whether it is the one or the other must necessarily depend upon the object with which the act is done. If the dominant object of leasing out is incidental to and for the purposes of the assessee's business, the income would be business income. What has to be discovered is whether the property is subservient to the main business of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distinct heads of income, profits and gains, 'salaries', 'interest on securities' and 'property', 'business', etc., is indicative of the intention of the Legislature in making the various heads of income, profits and gains mutually exclusive. So every item of income, whatever its source, would fall under one particular head and for the purpose of computing the income for charging of income-tax the particular section dealing with that head will have to be looked at. " Based on the above reasoning if the rental income of the building is treated as falling under the head " Income from house property ", question would be as to whether the assessee is entitled to deduction of depreciation under section 32 of the Act. Assuming that the building was used initially as a business asset, the assessee is not entitled to depreciation. Section 32(1) provides for certain deductions by way of depreciation of buildings, machinery, plant or furniture owned by the assessee and used for the purposes of business or profession. It is plain from the aforesaid provision that, in order to get deduction of depreciation, the assessee must be the owner of buildings, machinery, plant or furniture and secon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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