TMI Blog1978 (3) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... on 256(2) of the Income-tax Act, 1961, for requiring the Income-tax Appellate Tribunal to refer a certain question of law said to arise from its order in Income-tax Appeal No. 3052 (Bom) of 1968-69, pertaining to the assessment year 1965-66, to the High Court for its opinion, viz. : " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the receipts from hire of furniture amounting to Rs. 14,212 should be assessed as the assessee's income from business and not as income either from property or from other sources ? " In Miscellaneous Civil Case No. 35 of 1976, the Commissioner of Income-tax, Madhya Pradesh-I, Bhopal, has applied under section 256(2) of the Income-tax Act, 1961, for requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s employees as well as to the Government departments. The Income-tax Officer in both the years in question assessed the receipts from hire of furniture as the assessee's income from other sources under section 56 of the Income-tax Act, 1961. On appeal, the Appellate Assistant Commissioner upheld the order of the Income-tax Officer and rejected the contention of the assessee that receipts from hire of furniture should be treated as the assessee's income from business in the assessment year 1965-66. On further appeal, the Income-tax Appellate Tribunal, however, upheld the contention of the assessee, observing : " It will be seen that so far as the rent received by the assessee either from the members of its staff or from Government departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice, police station, Central excise office, etc., being incidental to the assessee's business, was taxable under section 28 of the Income-tax Act, 1961, as receipts from business and not under section 22 of the Act as income from property. Incidentally, we may mention that the department throughout accepted that the residential quarters constructed by the assessee for, and let out to, its employees, would be outside the scope of section 22 of the Income-tax Act, 1961, as being incidental to the assessee's business. In that view, the application under section 256(2) of the Act filed by the Commissioner of Income-tax, Madhya Pradesh-I, Bhopal, in respect of the assessment year 1966-67, in so far as it relates to question No. (1), i.e., as reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the word " inseparable " in clause (iii) of sub-section (2) of section 56 of the Income-tax Act, 1961, learned counsel for the Commissioner of Income-tax strenuously contends that clause (iii) would only apply in case of a composite lease, i.e., where an assessee lets on hire furniture belonging to him and also buildings, and the letting of the buildings is inseparable from the letting of the said furniture. We are afraid, the contention cannot be accepted. He, instead, tried to bring the receipts from hire of furniture under clause (ii) thereof. Again, that contention cannot be accepted. Section 56 of the Income-tax Act, 1961, so far as material, reads as follows : " 56. (1) Income of every kind which is not to be excluded from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d intend that the subject-matter of the lease should be enjoyed together and that the letting of the building and of the other assets should be practically one letting. The section does not require that the letting of the machinery, plant or furniture should be primary and the letting of the building subsidiary : Palkhivala's Income Tax, seventh edition, volume 1, page 576. In Sultan Brothers Private Ltd, v. Commissioner of Income-tax [1964] 51 ITR 353 (SC), their Lordships of the Supreme Court, after referring to the corresponding section 12(4) of the Indian Income-tax Act, 1922, held that the inseparability referred to is one that arises from the intention of the parties. That intention may be ascertained by framing the following quest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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