COMMISSIONER OF INCOME TAX Vs. JAGANNATHA GOVINDAS

JUDGEMENT

(1.) THE question referred to us :

(2.) IT would be clear from what we have stated above that the assessee leased out under a single lease a certain property of his own along with machinery, furniture, etc. We have our own doubts as to whether in this particular case the assessment of the entirety of the income under section 12 of the Act is justified. The income derived from property of which the assessee is the owner would properly come within the scope of section 9 of the Act. Where income is derived by the hiring out of machinery, plant or furniture belonging to an assessee, the assessment would fall within the scope of section 12 of the Act. In a case where such an income is derived by the hire of machinery, plant or furniture belonging to the assessee, but the hire is in association of the buildings let out, the buildings not belonging to the assessee and the letting of the buildings is inseparable with the letting of such machinery, etc., certain allowances are prescribed under section 12(4) of the Act. The implication would appear to be that in case income is derived in cases such as the above, it should be regarded as income derived from other sources under section 12 of the Act. We are not persuaded to believe that whether an assessee lets out buildings of his own along with machinery, plant and furniture, also belonging to him, under a composite lease, the assessment would fall under section 12. The various categories of such lettings dealt with under section 12 would appear to suggest that the property income could and should be separated from the income from machinery, plant, furniture, etc., and the two parts of the income dealt with under the separate heads of income provided by the Act. Though we are making these observations, it is not open to us to interfere with the assessment made under section 12 of the Act, as that question has not been referred to us.

(3.) THE basis of the Patna decision seems to be that since the cess itself was assessed on the net income derived from the property, it could not be said that that expenditure was incurred for the purpose of earning the income. THE case of a municipal tax would, however, appear to stand on a different footing. Municipal taxes are levied on the basis of a percentage of the capital value of the property and are not based on the income that is derived from the property. We are unable to agree with the contention of the department that the expenditure in question was not incurred for the purpose of earning the income from the property. THE Calcutta decision seems to us to be more to the point in the circumstances of the present case.