Law:

Section:

JUDGMENT Shah, J.-The assessees who are a limited company obtained on lease a plot of land at the Backbay Reclamation in Bombay and put up a residential building which could be adapted for use as a hotel, and furnished the same by installing furniture and fixtures and let it out to a tenant under a deed dated the 30th August, 1943, for six years for using it as a hotel. After the expiry of the first period of lease another deed of lease was executed on the 13th of August, 1949. Under that lease the lessee agreed to pay a net monthly rental of Rs. 5,950, for the lease of the building and at the rate of Rs. 5,000, for the hire of furniture and fixtures. Initially, the Income-tax Officer assessed the income received under the lease under section 12 of the Income-tax Act. For the assessment year 1952-53, the assessment proceedings were brought before the Tribunal and the Tribunal observed in the course of its judgment, though that question did not arise in the case, that "the question whether the income from that property should be computed under section 9 or under section 12 deserves further scrutiny." The Income-tax Officer then computed for the assessment year 1953-54 income out of the building under section 9 of the Income-tax Act and the income derived from hiring of the furniture and fixtures under section 12 of the Act. Against the order passed by the Income-tax Officer, the assessees appealed to the Appellate Assistant Commissioner. That Officer substantially confirmed the order passed by the Income-tax Officer. There was an appeal by the assessees to the Tribunal and the Tribunal affirmed the view of the taxing authorities. At the instance of the assessees, the Tribunal has referred 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 sections 9 and 10 or under section 12 of the Income-tax Act?" The question whether the income derived from the letting of the building and the furniture can be assessed under section 10 is easily answered. Neither before the Income-tax Officer, nor before the Appellate Assistant Commissioner, was…

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