PETITIONER: SULTAN BROTHERS (P) LTD. Vs. RESPONDENT: COMMISSIONER OF INCOME-TAX DATE OF JUDGMENT: 06/12/1963 BENCH: SARKAR, A.K. BENCH: SARKAR, A.K. SINHA, BHUVNESHWAR P.(CJ) HIDAYATULLAH, M. GUPTA, K.C. DAS AYYANGAR, N. RAJAGOPALA CITATION: 1964 AIR 1389 1964 SCR (5) 807 CITATOR INFO : RF 1967 SC 193 (22) R 1972 SC2315 (13) ACT: Income Tax-Assessment-Letting of building and furniture-Such letting, if business-Income Tax Act, 1922 (11 of 1922), ss. 10, 12(4). HEADNOTE: The appellant assessee let out a building fully equipped and furnished, for a term of six years for running a hotel and for certain ancillary purposes. The lease provided for a rent for the building and a hire for the furniture and fixtures. In the assessment of the income under the lease to income-tax, Held: Whether a particular letting is business has to be decided in the circumstances of each case. It would not be the doing 808 of a business if it was exploitation of his property by an owner. A thing cannot by its very nature be a commercial asset. A commercial asset is only an asset used in a business and nothing else. An activity is not business because it is concerned with an asset with which trade is commonly carried on. The present letting of the building did not amount to the doing of a business by the assessee and as such the income under the lease could not be assessed under s. 10 of the Income-tax Act as the income of a business. Commissioner of Income-tax v. Mangalagiri Sri Umamaheswara Gin and Rice Factory Ltd. (1927) I.L.R. 50 Mad. 529 and Commissioner of Income-tax v. Basotto Brothers Ltd. Madras. (1940) 8 I.T.R. 41, distinguished. United Commercial Bank Ltd. v. Commissioner of Income-tax, West Bengal, 32 I.T.R. 688. referred to. Even if the object of the assessee, a company, which was to acquire lands and buildings, and to turn them into account by leasing, be assumed to be a business activity, that would not turn the income from the lease to income from business. East Indian Housing & Land Development Trust Ltd. v. Com- missioner of Income-tax, (1961) 42 I.T.R. 49, relied on. The income from the hire of the furniture and fixture was assessable under s. 12 of the Act after providing for the allowances mentioned in sub-s. (3) of that section. Sub-section (4) of s. 12 is not confined to a case where the building let out does not belong to the person who let it out. The income contemplated in sub-s. (4) of s. 12 is an income which does not come within any of the earlier sections dealing with specific heads of income. In order that sub-s. (4) of s. 12 may apply, it is not necessary that the primary letting must be of the machinery, plant or furniture and together with such letting there is a letting of the building. When sub-s. (4) of s. 12 says that "the letting of the buildings is inseparable from the letting of the said machinery, plant or furniture" it only means that the parties to the letting must have so intended. There would be such an intention when they were intended to be enjoyed together. JUDGMENT:
CIVIL. APPELLATE JURISDICTION : Civil Appeal No. 63 of
1961.
Appeal from the judgment and order dated July 2,1959, of the
Bombay High Court in Income-tax Reference No. 59/1958.
809
A.V. Viswanatha Sastri, T.S. Diwanji, O.C. Mathur, J.B.
Dadachanji and Ravinder, for the appellant.
K.N. Rajagopal Sastri and R.N. Sachthey, for the respondent.
December 6, 1963. The Judgment of the Court was delivered
by.
SARKAR J.-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. 5,950 for the building
and a hire of Rs. 5,000 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-ss. (3) and (4) of that section.
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 assesses under s. 9 as it was the
specific section covering is and there was, therfore, no
scope for resorting to the residuary section, s. 12, in
respect of its income. The Appellate Assistant Commissioner
held on appear that the rent from a building could only be
assessed under s. 12 with the allowances mentioned in sub-
810
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 that section alone and referred to United Commercial
Bank Ltd. v. Commissioner of Income-tax, West Bengal(1) in
support of this view.
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 section 9, 10 or under
section 12 of the Income -tax Act.”
The High Court answered the question as follows:—
“The income from the building will be computed
under section 9, income from furniture and
fixtures under section 12(3) and that no part
of the income is taxable under section 10.”
(1) 32 I.T.R. 688.
811
The question framed is clearly somewhat inaccurate for what
the appellant con-tends 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.
Now, it is beyond dispute that the several heads of income
mentioned in s. 6 of the Act and dealt with separately in
ss. 7 to 12 are mutually exclusive, each head being specific
to cover the income arising from a particular source and
that it cannot be said that any one of these sections is
more specific than another-. see United Commercial Bank Ltd.
v. Commissioner of Income-tax(1). Therefore a particular
variety of income must be assignable to one or other of
these sections.
A broad reference to ss. 9, 10 and 12 may now be profitably
made. Section 9 provides for the payment of tax under the
head “Income from property” in respect of the bona fide
annual value of buildings or lands appurtenant thereto of
which the assessee is the owner. Certain buildings are
exempted but it is not necessary to refer to them. This
section also sets out the method. of calculation of the
annual value of the property on which the tax is to be
assessed. It is important to note here that under this
section a building has to be assessed to tax on its annual
value irrespective of the rent received from it, if any.
Section 10 deals with profits and gains of business,
profession or vocation. This section also provides the
method of computing the income and the allowances that the
assessee is entitled to deduct in making the computation.
Section 12 is the residuary section covering income,profits
and gains of every kind not assessable under any of the
heads specified earlier. It follows that if the income now
under consideration is taxable under s. 9 or s. 10, then it
cannot be taxed under s. 12. This is not in dispute.
(1) 32 I.T.R. 688.
812
The first contention of the appellant, as already seen, is
that the assessment should be made tinder s. 10 as of income
from a business. The reason for this preference is that
under that section it would be entitled to much larger
allowances as deductions in the computation of the income
than it would be under either s. 9 or s. 12. The appellant
put the matter in this way. Letting out of a commercial
asset is a business and what it did was to let out a
commercial asset, namely, a fully equipped hotel building.
It also said that the lessor’s covenants in the lease showed
that in making the lease, the appellant was carrying on a
business and not letting out property. This is somewhat
different from the way in which it was put before the
Tribunal. The argument advanced before the Tribunal was not
advanced in this Court and need not, therefore, be
considered. It is indeed not very clear.
A very large number of cases was referred to in support of
this contention but it does not seem to us that much
assistance can be derived from them. Whether a particular
letting is business has to be decided in the circumstances
of each case. We do not think that the cases cited lay down
a test for deciding when a letting amounts to a business.
We think each case has to be looked at from a businessman’s
point of view to find out whether the letting was the doing
of a business or the exploitation of his property by an
owner. We do not further think that a thing can by its very
nature be a commercial asset. A commercial asset is only an
asset used in a business and nothing else, and business may
be carried on with practically all things. Therefore it is
‘not possible to say that a particular activity is business
because it is concerned with an asset with which trade is
commonly carried on. We find nothing in the cases referred,
to support the proposition that certain assets are
commercial assets in their very nature.
The object of the appellant company no doubt was to acquire
land and buildings and to turn the same into account by
construction and reconstruc-
813
tion, decoration, furnishing and maintenance of them and by
leasing and selling the same. The activity contemplated in
the aforesaid object of the company, assuming it to be a
business activity, would not by itself turn the lease in the
present case into a business deal. That would follow from
the decision of this Court in East India Housing and- Land
Development Trust Ltd. v. Commissioner of Income-tax(1)
where it was observed that “the income derived by the
company from shops and stalls is income received from
property and falls under the specific head. described in s.
9. The character of that income is not altered because it is
received by a company formed with the object of developing
and setting up markets.”
Now the cases on which learned counsel for the appellant
especially relied were cases of the letting out of plant and
machinery, in some instances along with the factory
buildings in which they had been housed. In all of them,
except one, which we will presently mention, the assessee
had previously been operating the factory or mill as a
business and had only temporarily let it out as it was not
convenient for him at the time to carry on the business of
running the mill or factory. In these circumstances, it was
held that by letting out the plant, machinery and building
the assessee was still conducting a business though not the
business of running the mill or factory.
In Commissioner of Income-tax v. Mangalagiri Sri
Umamaheswara Gin and Rice Factory Ltd. (2). the assessee who
was the owner of a fully equipped rice mill which it had
constructed for its own trade but had never worked it,
decided to lease it out to another person. It was held that
the income was income from business. The reason given by
one of the learned Judges, Krishnan J., was, “the rent
received is not only for the use of the mill but also to
cover the necessary wear and tear” and the lease was of the
mill as a working concern. Beasley J. agreed but perhaps
with a certain amount of hesita-
(1) [1961] 42 I.T.R. 49. (2) [1927] I.L.R. 50 Mad. 529.
814
tion. In the later case of Commissioner of Income-tax v.
Bosotto Brothers Limited, Madras(1) which concerned income
from the letting out of a fully equipped hotel which had
previously been run by the assessee himself as a hotel,
Krishnaswami Ayyangar J. felt himself bound by the
Mangalagiri Gin and Rice factory(2) and apparently for that
reason only decided to agree with his colleagues that the
case might fall under s. 10. Mockett J. thought that what
was done was to lease out an undertaking of a hotel known as
a hotel business and in that view he agreed that the case
might come under s. 10.
It seems to us that Bosotto Brothers Ltd. case(1) would have
no application because it cannot possibly be said in the
case in hand that the appellant had let out any business
undertaking. Admittedly it never carried on any business of
a hotel in the premises let out or otherwise at all. Nor is
there anything to show that it intended to carry on a hotel
business itself in the same building even if it had the
power under its memorandum to do so, as to which a great
deal of doubt may be entertained. In Mangalagiri Gin and
Rice Factory case(2), what appears to have been really let
out was the plant and machinery and the case was decided on
the basis of the wear and tear caused to them. Furthermore,
in that case it does not appear at all to have been
contended that s. 9 had any application. Whether that case
was rightly decided or not, is not a question that properly
arises in this case for none of the considerations which led
to the decision arrived at there, exists here; there is no
question of any wear and tear to machinery nor of a letting
out of any working concern. Besides, the cases of
Mangalagiri Gin and Rice Factory(2) and Bosotto Brothers
Limited(1), were both decided before sub-s. (4) of s. 12 was
enacted. Sub-section (4) covers a case where a building and
furniture are inseparably let out. It cannot be said what
the decision in those cases would have been if s. 12(4) was
then in existence. We do not think that it would be
(1) [1940] 8 I.T.R. 41.
(2) [1927] I.L.R. 50 Mad. 529.
815
profitable to refer to the other cases cited at the bar for
they carry the matter no further.
Learned counsel for the appellant also relied on certain
clauses in the lease and a clause in the memorandum of the
appellant company to show that the lease amounted to the
carrying on of a business. We shall now turn to these
provisions. Clause 3(b) of the memorandum gave power to the
appellant to manage land, buildings, and other property and
to supply the tenants and occupiers thereof refreshment,
attendants, messengers, light, waiting-room, reading room,
meeting, room, libraries, laundry convenience, electric
conveniences, lifts, stables and other advantages. The
contention was that this cause in the memorandum gave the
appellant a power to carry on a business of the nature of
running a hotel. We do not think, it did. But in any case,
by the lease none of the objects mentioned in this clause
was sought to be achieved. We find nothing in the lessor’s
covenants to some of which we were referred to bring the
matter within cl. 3(b) of the memorandum. None of these
clauses support the contention that by granting the lease,
the appellant did anything like carrying on the business of
running a hotel. Thus cl. (a) is a covenant for quiet
enjoyment. Clause (b) provides for a renewal of the lease
of the demised premises being granted to the lessee for a
further term of six years at his request. Clause (c) deals
with payment of municipal bills and similar charges and
ground rent. Clause (d) provides that the lessor shall
during the continuance of the lease and on its renewal
provide various things which included furniture, pillows,
mattresses, gas-stoves, bottle coolers, refrigerators, lift,
electric fittings and the like and also paint the outside of
the building with oil once in five years and keep the
building insured. These are ordinary covenants in a lease
of a furnished building. These do not at all show that the
lessor was rendering any service in the hotel business
carried on by the lessee or in fact doing any business at
all. On the facts of this case we are unable to agree that
816
the letting of the building amounted to the doing of a
business. The income under the lease cannot, therefore be
assessed under s. 10 of the Act as the income of a business.
The next question is about sub-s. (4) of s. 12. The
relevant part of s. 12 may now be set out.
S. 12. (1) The tax shall be payable by an
assessee under the head ‘Income from other
sources’ in respect of income, profits and
gains of every kind which may be included in
his total income if not included under any of
the preceding heads.
x x x x x
(3) Where an assessee lets on hire machinery
plant or furniture belonging to him, he shall
be entitled to allowances in accordance with
the provisions of clauses (iv), (v), (vi) and
(vii) of sub-section (2) of section 10.
(4) Where an assessee lets on hire machinery
plant or furniture belonging to him and also
buildings, and the letting of the buildings is
inseparable from the letting of the said
machinery, plant or furniture, he shall be
entitled to allowances in accordance with the
provisions of the clauses (iv), (v), (vi) and
(vii) of sub-section (2) of section 10 in
respect of such buildings.
To clear the ground it may be stated here that once s. 10 is
found inapplicable to the case, there is no dispute that the
income from the hire of the furniture and fixtures was
rightly assessed under s. 12 after providing for the
allowances mentioned in sub-s. (3) of that section. The
only dispute that then remains is whether, the building is
to be assessed under s. 9 which of course will have to be on
the basis of its annual value or whether the rent from the
building has to be assessed under s. 12 after the allowances
mentioned in sub-s. (4) have been deducted.
We have earlier said that s. 12 can only apply if no other
section is applicable, because it deals
817
with the residuary head of income. Now sub-s. (4) of s. 12
only deals with certain allowances and it obviously proceeds
on the basis that the income mentioned in it, namely, that
from the buildings when inseparably let with plant,
machinery or furniture is not income falling under any of
the specific heads dealt with by ss. 7 to 11 and is,
therefore, income falling under the residuary head contained
in s. 12. There a preliminary difficulty arises. In
respect of buildings-and with them alone sub-s. (4) of s. 12
is concerned-as already seen, the owner is liable to tax
under s. 9 not on the actual income received from it but on
its annual value and in fact quite irrespective of whether
he has let it out or not. How then can it be said that the
rent received from a building could at all come under s. 12?
In other words, why can it not be said that the specific
section, that is, s. 9, covers the case and the income from
the building cannot be assessed under s. 12 and no question
of giving any allowances under s. 12 (4) arises? It has
sometimes been suggested as a solution for this difficulty
that sub-s. (4) of s. 12 applies only when the building is
let out by a person who is not the owner because such a case
would not come under s. 9. Counsel for neither party
however was prepared to accept that suggestion. Indeed that
suggestion has its own difficulty. Under sub-s. (4) of s.
12 the assessee becomes entitled among others to an allow-
ance in accordance with s. 10(2)(vi) which is on account of
depreciation of the building “being the property of the
assessee” from which it follows that sub-s. (4) of s. 12
contemplates the letting of the building by the owner. Sub-
section (4) of s. 12 must, therefore, be applicable when
machinery, plant or furniture are inseparably let along with
the building by the owner. If sub-s. (4) of s. 12 is to
have any effect-and it is the duty of the court so to
construe every part of a statute that it has effect-it must
be held that the income arising from the letting of a
building in the circumstances mentioned in it is an income
coming within the residuary head. If a person cannot be
assessed under s. 12 in respect of the rent
1/SCI/64-52
818
of a building owned by him, sub-s. (4) will become
redundant; there will be no case in which the allowances
mentioned by it can be granted in computing the actual
income from a building. An interpretation producing such a
result is not natural. We :must, therefore, hold that when
a building and plant, machinery or furniture are inseparably
let the Act contemplates the rent from the building as a
residuary head of income.
The next question is, does the present letting come within
the term of sub-s. (4) of s. 12 ? That provision requires
two conditions, namely, that the furniture should be let and
also buildings and the letting of the buildings should be
inseparable from the letting of the furniture. Now here
both furniture and building have no doubt been let. The
question is, are they inseparably let? The High Court does
not appear to have answered this question for it was of the
view that not only must the two be inseparably let out but
also that “the primary letting must be of the machinery,
plant or furniture and that together with such letting or
along with such letting, there is a letting of buildings”.
The High Court held that the primary letting in the present
case was of the building and, therefore, deprived the
appellant of the benefit of s. 12 (4). We may state here
that the Tribunal had thought that by requiring that the
letting of one should be inseparable from the letting of the
other, the section really meant that the primary letting was
of the machinery and the letting of the building was only
incidental to the letting of the machinery. It also held
that in the present case the primary letting was of the
building.
Now the difficulty that we feel in accepting the view which
appealed to the High Court and the Tribunal is that we find
nothing in the language of sub-s. (4) of s. 12 to support
it. No doubt the sub-section first mentions the letting of
the machinery, plant or furniture and then refers to the
letting of the building land further uses the word ‘also’ in
connection with
819
the letting of the building. We, however, think that this
is too slender a foundation for the conclusion that the
intention was that the primary letting must be of the
machinery, plant or furnitures. In the absence of a much
stronger indication in the language used, there is no
warrant for saying that the sub-section contemplated that
the letting of the building had to be incidental to the
letting of the plant, machinery or furniture. It is
pertinent to ask that if the intention was that the letting
of the plant, machinery or furniture should be primary, why
did not the section say so? Furthermore, we find it
practically impossible to imagine how the letting of a
building could be incidental to the letting of furniture,
though we can see that the letting of a factory building may
be incidental to the letting of the machinery or plant in it
for the object there may be really to work the machinery.
If we are right in our view, as we think we are, that the
letting of a building can never be incidental to the letting
of furniture contained in it, then it must be held that no
consideration of primary or secondary lettings arises in
construing the section for what must apply when furniture is
let and also buildings must equally apply when plant and
machinery are let and also buildings. We think all that
sub-s. (4) of s. 12 contemplates is that the letting of
machinery, plant or furniture should be inseparable from the
letting of the buildings.
What, then, is inseparable letting? It was suggested on
behalf of the respondent Commissioner that the sub-section
contemplates a case where the machinery, plant or furniture
are by their nature inseparable from a building so that if
the machinery, plant or furniture are let, the building has
also necessarily to be let along with it. There are two
objections to this argument. In the first place, if this
was the intention, the section might well have provided that
where machinery, plant or furniture are inseparable from a
building and both are let etc. etc. The language however is
not that the two must be
820
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, they simply rest on the floor of the
building it,. which it lies and the two indeed are always
separable. 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-s.
(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 the furniture and the
building-that the two should be enjoyed together? Was it
the intention to make the letting of the two practically one
letting? Would one have been let alone a lease of it
accepted without the other? If the answers to the first two
questions are in the affirmative, and the last in the
negative then, in our view, it has to be held that it was
intended that the lettings would be inseparable. This view
also provides a justification for taking the case of the
income from the lease of a building out of s. 9 and putting
it under s. 12 as a residuary head of income It then becomes
a new kind of income, not covered by s. 9, that is, income
not from the ownership of the building alone but an income
which though arising from a building would not have arisen
if the plant, machinery and furniture had not also been let
along with it.
That takes us to the question, was the letting in the
present case of the building and the furniture and fixtures
inseparable in the sense contemplated in the sub-section as
we have found that sense to be ?
821
It is true that the rent for the building and the hire for
the furniture were separately reserved in the lease but that
does not, in our view, make the two lettings separable. We
may point out that the Tribunal has taken the same view and
the High Court has not dissented from it. In spite of the
sums payable for the enjoyment of two things being fixed
separately, the intention may still be that the, two shall
be enjoyed together. We will now refer to the provisions in
the lease to see whether the parties intended that the
furniture, fixtures and the building shall all be enjoyed
together. Clause 1 of the lessee’s covenant, in our
opinion, puts the matter beyond doubt and it is as follows:-
1. (a) To use the demised premises and the
said furniture and fixtures for the purpose of
running hotel, boarding and lodging house,
restaurant, confectionary and such other
ancillary businesses as are usually or
otherwise can be conveniently carried on with
the said business in the said premises such as
providing show-cases show windows, newspaper
stall, dancing and other exhibition of arts,
meeting rooms etc., and not for any other
purpose without the previous permission in
writing of the Lessors.
It is clear from this clause that the building and the
fixtures and furniture were to be used for one purpose,
namely, for the purpose of running a hotel with them all
together. Again cl. 1(h) of the lessee’s covenant provided
that the lessee is not to remove any article or thing from
the premises except for the purposes of and in the course of
the hotel business which latter would be for effecting
repairs to them or for replacing them where it was the duty
of the lessee to do so under the lease. We think,
therefore, that the lease clearly establishes that it was
the intention of the parties to it that the furniture and
fixture and the building should be enjoyed all together and
not one separately from the other.
Before we conclude we think we should refer to two other
covenants. First, there is a lessor’s
822
covenant No. 11 (b) to renew the lease of the demised
premises which term, it may be conceded, means the building
only, for a further term of six years. This clause says
nothing about the renewal of any lease in respect of
furniture or fixtures. Likewise, cl. III(2) provides that
if the demised premises, that is to say,the building, be
destroyed or damaged by fire it shall be the option of the
lessee to determine the lease and in any event the rent
shall be suspended until the premises shall again be
rendered fit for occupation and use. Here also there is no
mention of the furniture. It was said on behalf of the
respondent that these two clauses indicate that the building
and the furniture were being treated separately and there-
fore the lettings of them were not inseparable. We are
unable to accept this contention. As regards renewal of the
lease of the building, there is cl. (II)d making
substantially a similar provision in respect of the
furniture and fixtures. it requires the lessor to provide at
all times during the continuance of the lease and the
renewal thereof, the furniture and fixtures mentioned in the
lease. Therefore, though the renewal clause in cl. 11(b)
does not mention the lease of furniture or fixtures being
renewed, cl. II(d) makes it incumbent on the lessor to
supply and maintain them during the renewed term of the
lease of the building. Clause II(d) would also cover a case
where by fire the furniture was destroyed. In such a case
the lessee could under that clause require the lessor to
provide and if necessary to replace, the destroyed
furniture. To the same effect is cl. 1(e) which says that
the major repair to or replacement of the furniture, shall
be made by the lessor. Such repair or replacement may, of
course, be necessitated in a case where the furniture or
fixtures are damaged by fire. We, therefore, think that the
clauses in the lease on which the respondent relies do not
indicate that the letting of the building was separable from
the letting of the furniture and fixtures. We think that
the lease satisfies all the conditions for the applicability
of s. 12(4) and is covered by it.
823
In the result we answer the question framed thus: The rent
from the building will be computed separately from the
income from the furniture and fixtures and in the case of
rent from the building the appellant will be entitled to the
allowances mentioned in sub-sec. (4) of s. 12 and in the
case of income from the furniture and fixtures, to those
mentioned in sub-s (3), and that no part of the income can
be assessed under s. 9 or under s. 10. The judgment of the
High Court is set aside. The appellant will be entitled to
the costs here and below.
Appeal allowed.
