Sarkar, J. - (1.) The appellant which is a limited company is the owner of a certain building constructed on Plot No. 7 on the Church Gate Reclamation in Bombay which it had fitted up with furniture and fixtures for being run as a hotel. By a lease dated August 30, 1949, the appellant let out the building fully equipped and furnished to one Voyantzis for a term of six years certain from December 9, 1946 for running a hotel and for certain other ancillary purposes. The lease provided for a monthly rent of Rs. 5950/- for the building and a hire of Rs. 5000/- for the furniture and fixtures. The question in this appeal is how the income received as rent and hire is to be assessed that is, under which section of the Income-tax Act, 1922 is it assessable The appellant contends that the entire income should be assessed under S. 10 as the income of a business or, in the alternative, the income should be assessed under S. 12 as income from a residuary source, that is a source not specified in the preceding sections 7 to 11 with the allowances respectively specified in sub-sections (3) and (4) of that section.
(2.) For the assessment year 1953-54, the appellant was taxed under S. 9 of the Income-tax Act in respect of the building and under S. 12 in respect of the hire received from the furniture and fixtures. The Income-tax Officer held that the building had to be assessed under S. 9 as it was the specific section covering it and there was, therefore, no scope for resorting to the residuary section, S. 12, in respect of its income. The Appellate Assistant Commissioner held on appeal that the rent from a building could only be assessed under S. 12 with the allowances mentioned in sub-s. (4) where for the letting of the furniture and fixtures it was indispensable to let the building also and as that was not the case here the building had been rightly assessed under S. 9. The appellant then appealed to the Income-tax Appellate Tribunal. The Tribunal confirmed the decision of the authorities below holding that the allowances mentioned in sub-s. (4) of S. 12 could not be allowed as the sub-section permitted them only where the letting of the building was incidental to the letting of the furniture and fixtures and as that had not happened in the present case the rent could not be assessed under S. 12. It was also contended by the appellant before the Tribunal - a contention which does not appear to have been advanced at any earlier stage - that the entire income should really have been assessed under S. 10 of the Act inasmuch as the income taxed was from "the letting out of the totality of the assets which was the business of the assessee". The Tribunal rejected this contention also, holding that since there was a specific head in regard to income from property, namely S. 9, the income from the property leased had to be computed under the section alone and referred to United Commercial Bank Ltd. v. Commr. of Income-tax, West Bengal, 1957-32 ITR 688 in support of this view.
(3.) Thereafter at the request of the appellant the Tribunal stated a case under S. 66(1) of the Act to the High Court at Bombay for decision of the following question: "Whether on the facts and circumstances of the case, the income derived from letting of the building constructed on Plot No. 7 is properly to be computed under Ss. 9, 10 or under S. 12 of the Income-tax Act." The High Court answered the question as follows: "The income from the building will be computed under S. 9, income from furniture and fixtures under S. 12(3) and that no part of the income is taxable under S. 10." The question framed is clearly somewhat inaccurate for what the appellant contends in the first place is that the entire income and not that from the building alone, should be assessed under S. 10. This inaccuracy has not however misled anyone and the matter has been argued before us without any objection from the respondent on the basis as if the question was in terms of the appellant's contention.;